Biotech Looks Set to Boil: Interesting article FYI

By Mark Manning
I like to look behind the sectors and indices in the limelight for stocks and sectors that are quietly gaining strength and building solid bases.

These are the areas that institutions will look to rotate money into when other sectors become too hot.

They are often washed-out sectors that have been out of favor for some time and are off momentum-investors' screens.

The biotech sector is gaining strength and breaking out of a low-level base that it fell into after breaking down following a strong run last November.

Last week, the Biotech HOLDRs broke up above the 200-day moving average on solid volume for the first time since March.

It pulled back a few days later, but it's now continuing its upward move.

I don't see a lot of resistance until it gets up around the $200 area. (See chart below.)

Amgen is the bellwether of the group, and it is leading the charge higher.

It has been building a base over the last five months.

Now that it has consolidated -- the latest move pushing above the 200-day moving average -- it looks like it wants to continue higher.

It doesn't have any major resistance until the $80-$85 area.

Any pullback on low volume could be an opportunity to take a position.

I'm setting up to take positions based on earnings and upcoming pipeline announcements before year's end. I think that the biotech sector as a whole will begin to rebound before the end of the year. I am keeping eyes open on PPHM (already in but may get even more) and THLD.