By Profit Scanner for InvestorPlace Media
Healthcare has been far and away the best sector of 2015 so far — and biotech stocks are no exception.
The iShares Nasdaq Biotechnology Index (ETF) (IBB) is up 9.4% in just the year-to-date; that’s about twice the return of the Nasdaq as a whole, and four-and-a-half times more than the S&P 500. And analysts at JPMorgan Chase & Co. (JPM) expect the trend to continue.
But talk is cheap. So, it’s always wise to use technical analysis to evaluate any investment theme before diving in.
The Profit Scanner powered by Recognia is currently bullish on IBB and has also identified three individual biotech stocks that are looking great for short-term, bullish trades.
Let’s take a look at the three biotech stocks to buy:
Amgen, Inc. (AMGN)
Amgen, Inc. (AMGN) has been flashing nothing but bullish signals since Feb. 13. The next trading day, Feb. 17, Profit Scanner found confirmation of a bullish Symmetrical Continuation Triangle on AMGN’s chart. This pattern implies 7% – 9% upside within the next 16 trading days.
Essentially, the bullish Symmetrical Continuation Triangle suggests that AMGN stock’s prior uptrend will continue. AMGN’s chart consists of two converging trendlines, with prices reaching lower highs and higher lows; as the range narrows, volume diminishes.
Then the pattern is confirmed when Amgen stock breaks up out of the upper trendline, on a noticeable increase in volume.
As you can see in the above chart, that’s just what AMGN did on Tuesday, on above-average volume of 3.9 million shares traded. As mentioned above, this event suggests significant upside for AMGN stock; specifically, the Profit Scanner’s target range for Amgen is $166 – $169.
So far, Amgen is well on its way. On Wednesday, the shares overtook their 21-day moving average, and the short-term “Know Sure Thing” (KST) turned bullish as well. The KST is basically a measure of momentum. When this oscillator overtakes its moving average, it implies that the stock is in a bullish trend. Traders looking for a solid long trade should consider all of these to be encouraging signs.
Keryx Biopharmaceuticals (KERX)
Wednesday was an excellent day for Keryx Biopharmaceuticals (KERX) as well. At the Feb. 18 close, Profit Scanner spotted a Head and Shoulders Bottom on KERX stock’s chart.
This popular technical pattern is marked by three successive declines after a significant downtrend. The “head” is the lowest low, which comes in the middle and is flanked by two higher lows — the “shoulders.” When the stock finally closes above the neckline (drawn between the two highs), it implies a reversal to a new uptrend.
In KERX’s case, Profit Scanner is expecting a 10% – 12% rally, to the $13.80 – $14.10 range, in the next 22 trading days.
If the Head and Shoulders Bottom wasn’t enough to get your attention, there were several other bullish signals for Keryx Biopharmaceuticals on Wednesday, too: its Relative Strength Index (RSI), Williams %R and Momentum indicator all turned bullish, and KERX stock price crossed above its 21-day moving average as well.
Achillion Pharmaceuticals, Inc. (ACHN)
Achillion Pharmaceuticals, Inc. (ACHN) is also presenting a profit opportunity for bulls. On Wednesday, Achillion’s Momentum indicator turned bullish. The day before, a bullish Continuation Wedge was confirmed on ACHN’s chart when Achillion stock broke above its previous trendline.
You can see an excellent example of the bullish Continuation Wedge in the above chart. The pattern constitutes a temporary interruption to a larger uptrend, and takes the form of two converging trendlines slanting down against the trend. When Achillion stock price overtakes the upper trendline, you can expect that the prior uptrend will now resume.
The Profit Scanner is expecting a significant rally for ACHN from here, back to the $16 – $17.25 level — a 28% – 38% rally from current levels — in just the next 16 trading days.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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