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Tuesday Wrap-Up: Biotechs Are Hot!!

|Includes:APA, BCRX, GOOG, GlaxoSmithKline (GSK), HIG, MYGN, SNY

Yesterday, the market jumped in the morning, then, retreated in the afternoon.  Today, it was a similar scenario, although the markets did manage to keep some gains.  We continued to lock in profits.  Yesterday we took profits on HIG and APA:

August 24, 2009
07:26 | HappyTrading APA ($89.65) Sold to Close APAIR Sep 90 calls, at $3.00 +43%
07:17 | HappyTrading HIG ($21.90) Sold to Close HIGIW Sep 18 calls, at $4.80 +71%

Today, we cashed in on GOOG and the rest of our HIG position:
August 25, 2009 
10:34 | HappyTrading HIG ($22.47) Sold to Close HIGIW Sep 18 calls, at $5.30 +89%
07:15 | HappyTrading GOOG ($472.50) Sold to Close GOPII Sep 480 calls, at $9.00 +114%

HIG does look like it could go higher from here and test the $23 level.  But, I decided to take the remaining position off when the market became unstable this afternoon.

Financials and techs were strong today, but, commodity stocks were weak.  Oil prices fell, ahead of the crude inventories data tomorrow.  Biotech stocks kept going higher.  BTK (biotech index) recorded a new all-time high today, pushing all the way to almost 920 before closing at 908.88, above the 900 level for the first time!  Small-cap biotech stocks seem to be especially hot!

Yesterday, pressure on FDA to speed up the swine flu vaccines boosted BCRX stock up almost +26%!  Today, HGSI jumped to almost $20/share on rumors that GSK could be looking to make a bid for HGSI.  Last Thursday, in our Trading Room, I noted:

August 20, 2009 12:01 PM
setting up for a new breakout...

Yesterday, HGSI started to make a move, and, I added:
August 24, 2009 7:36 AM

August 24, 2009 8:18 AM
still climbing... $18 is the next resistance. 
(HGSI closed at $17.18)

Today, HGSI opened above $18 and after the morning pullback, I commented:
August 25, 2009 7:22 AM
should test $20 from here...

HGSI went all the way to $19.98 (just 2 cents from my target), and came back down to close at $19.2.  Elsewhere, GENZ added +3.68% today on an analyst upgrade.  After the market, MYGN shares jumped almost +7% on better-than-expected earnings.

The Dow ended up +30.01 points; SPX added +2.43 points; Nasdaq gained +6.25 points:

BTK (biotechs) led the techs with a +2.83% rise.  XLF (financials) added +1.26%.  USO (oil) fell 2.95% and UNG (natural gas) was also in the red.  OIH (oil services) lost 2.05%, while XLE (energy) slipped 1.53%.  XME (metals and mining) was also weak.  FXI (Chinese ADRs) edged higher.


SPX added +2.43 points to close at 1028.  Its daily MAs and MACD went higher.


Nasdaq gained +6.25 points to close at 2024.23.  Its 10-day MA and MACD turned up.

After breaking above the recent trading range last week, the market traded sideways for the past 2 days.  This allows the market to let off some steam while keeping its altitude.  The daily MAs on both SPX and Nasdaq are curving higher; these are bullish signals.  After the morning jump yesterday, the commodity sectors started to pullback.  The commodity sectors were mostly weak again today; and, without them, the market is having difficulty to rally higher.  Financials and techs look strong and should break higher in a stronger market environment.  We'll get the crude inventories data tomorrow.  So, we'll wait and see how the commodity sectors react.

Good night and HappyTrading! ™