Biotech Breakouts

Biotechs, biotechs, biotechs. They continue to be hot, but many of the big names are played by so many folks, you may have to dig a little to find really big movers based on momentum. I know that some traders don't like to venture into the small-cap or even micro-cap space for biotechs, so I offer up Celldex Therapeutics (CLDX). The chart looks fantastic. The price pattern is strong, and I am looking for any pullbacks to the trendline that has formed over the past five days as a potential buying opportunity. There are no yellow flags or bearish divergences that I'm concerned about. Obviously, reversals in biotechs can come -- and come quickly -- but the technical picture is very strong.

Celldex Therapeutics (CLDX) Source: View Chart » View in New Window » Two smaller names breaking out today are Repligen (RGEN) and Arrowhead Research (ARWR). These are smaller names, with market caps of $325 million and $125 million, respectively, so one should be careful when trading companies of this size. But both are experiencing a huge surge in volume today with breakouts in price, MACD and Commodity Channel Index (CCI). Both stocks are pushing higher out of a recent squeeze in the Bollinger Bands, and neither has anything in the way of price resistance ahead. When dabbling in the biotech space, especially the small biotechs, I prefer to buy several names and commit less money to each. This minor diversification should hurt a bit less if one reverses sharply. I would not look to keep either name if they close lower for two consecutive days after entry....23 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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