Monday, April 26, 2010

Biotechs Show Relative Weakness



Even though the stock market has been going up, there is one group that is showing clear relative weakness and that group is the biotechs. Two weeks ago as the market continued moving higher, the biotechs (BBH) began to move sideways after peaking out on March 22nd. BBH then gapped down which clearly broke the uptrend line.

Two biotech stocks which are leading BBH lower are Gilead Sciences Inc (GILD) and Biogen Idec Inc (BIIB). These two stocks are the 2nd and 3rd most heavily weighted components of BBH.

Given the weakness of the biotechs, the next most logical downside objective would be a test of last November's low which comes in around the 89 level.

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