A Brainstorm On Biotech Stocks

The play has been to use the weekly Biotech index as a backbone. As long as it is on this firm trend, the sector is okay.

With the above backbone in place the area I (in temporary Casino Patron mode) have been working is in the more speculative Biotech stocks that had formed basing patterns. This was originally a seasonal (tax loss/Jan. effect) play but now it appears to be morphing into a latter stage sector play as the speculative stuff starts jumping well beyond January. Last week we looked at TTNP, which I de-risked by taking half off the table. Also, profits were taken on CUR and OMED. As these things bounce up and down, some provide buy back opportunities as well.

This week Brainstorm (what a name) joins the festivities. I have been sitting on this interminably since buying the post-pump crash in January.

Again, aside from being a lot of fun in the Casino, these jumps in the speculative end of the sector can be used as tools.  In this case the tools are saying that speculative froth is building in the Biotech sector and in the broader US market as well. While it can take months to play out, I am generally reading this and similar phenomena as a symptom of a late stage bull market.

I mean, they are not all suddenly on top of the next great new drug are they?  Maybe they are just starting to reel in a lot of naive investors’ dreams of the next great new drug. Whatever… keeping that mindset will at least keep me on my mission of profit taking and capital redeployment in other items that look ready.