It’s been something of a lackluster week for the broad market — but biotech has really shined.
While the S&P 500 was up just 1.3% as of Wednesday afternoon, biotechs as a group outperformed, gaining nearly 2.5%.
This sector is famous for being a volatile one, so timing is crucial … and that’s where technical analysis can help. From its daily scan of more than 65,000 charts, here are four such stocks that the Profit Scanner powered by Recognia is targeting for 15% upside from current prices.
4 Biotech Stocks Poised to Jump 15%: ProShares Ultra Nasdaq Biotechnology ETF (BIB)
Click to Enlarge First up is an opportunity to trade a basket of 150 biotech stocks, via the ProShares Ultra Nasdaq Biotechnology ETF (NASDAQ:BIB). At Tuesday’s close, the Profit Scanner found that BIB had made an Ascending Continuation Triangle — one that carries about 12% to 15% potential upside.
In the chart, you can see the biotech ETF making higher lows and constant highs around the $175 level. At this price, buyers are more aggressive than sellers … and when the “supply” starts to run out, the shares then break out above that previous price ceiling.
For this particular Ascending Continuation Triangle, the Profit Scanner is looking for BIB to keep shooting higher to the $200-$205 range in the next 20 trading days.
More aggressive traders may want to consider trading BIB options as a cheaper alternative to trading the ETF directly. With the chart pattern expected to play out in about the next month, the BIB May $175 calls or the BIB May $176 calls could be a smart play … or, if you’d prefer to pay a little more premium in exchange for buying the trade a bit more time, there are June options available as well.
4 Biotech Stocks Poised to Jump 15%: Amgen, Inc. (AMGN)
Click to Enlarge Next up is one of BIB’s biggest holdings and a very popular stock in the biotech space: Amgen, Inc. (NASDAQ:AMGN). Despite Tuesday being a down day for the broad market, AMGN extended its Monday rally to gain another 1.5%. And at Tuesday’s close, the Profit Scanner identified a bullish Continuation Diamond on AMGN’s chart that suggests even more upside lies ahead.
The bullish Continuation Diamond begins during a downtrend, and starts with higher highs and lower lows in a broadening pattern. The trading range gradually narrows — then the stock breaks above the diamond’s boundary lines to resume the prior uptrend. You can see this very action play out in Amgen’s chart.
In analyzing chart patterns like these, pay attention to how long the pattern took to form. If the pattern covers just a few trading days, you can take that as a short-term signal … and if it took several months (as with AMGN), then that’s a longer-term signal.
In AMGN’s case, the Profit Scanner is expecting the stock to reach $190-$195 in the next 122 trading days. In other words, look for Amgen to gain another 12%-15% within about six months.
And the technicals also suggest that you may be able to get some quicker profits in AMGN, too, while you wait for the above pattern to play out. The April 21 session also saw two short-term bullish signals for the stock, via the Commodity Channel Index and the short-term “Know Sure Thing” (KST) indicators.
The former tells us that it’s a good time to initiate a short-term long trade, while the latter indicator shows that momentum just turned bullish.
AMGN has a robust option chain, so that might be just the ticket to shorter-term profits on this biotech powerhouse.
4 Biotech Stocks Poised to Jump 15%: PTC Therapeutics, Inc. (PTCT)
PTC is not as well-known as the Amgens of the world — perhaps because it focuses on therapies for “rare and genetic diseases,” particularly those involving nonsense mutations — but the stock is on quite a tear. PTCT shares are up more than 37% for the year to date, and the Profit Scanner is looking for about 15% further upside from here.
At Tuesday’s close, the Profit Scanner determined that PTCT (like AMGN) just completed a bullish Continuation Diamond. Expect PTCT to hit $88-$92 in the intermediate term, within 37 trading days.
4 Biotech Stocks Poised to Jump 15%: Insmed Incorporated (INSM)
Click to Enlarge Last but not least is Insmed Incorporated (NASDAQ:INSM), a smaller-cap biopharma that focuses on treatments for lung diseases. On Monday, INSM gained nearly 2% to close at $23.08, confirming an Ascending Continuation Triangle pattern.
The Profit Scanner’s upside target for Insmed is $26.80-$27.60, or a 14%-18% move from current levels, in the next 21 trading days. There was another bullish signal the next day: on Tuesday, INSM’s short-term KST turned bullish, suggesting the positive momentum will continue in the nearer term as well.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.