Biogen Inc. (BIIB) — The second half of 2015 has been a bumpy ride for the biotechnology group as broader market volatility exacerbated moves in biotech companies large and small. Of course, after a 360% rise in iShares NASDAQ Biotechnology Index (ETF) (IBB) between August 2011 and its July 2015 high, we were due for a mean-reversion move lower. And while the correction in biotechs may not be over, certain names seem increasingly antsy for some tradeable upside, including BIIB stock.
A look at the weekly chart gives us some important perspective. Note that over the past couple of years, BIIB stock extended further and further above its longer-term trendline until it finally overshot too far in March of this year.
BIIB stock then retraced to its 2013 support line, snapped it in July, and fell to its longer-term support line in October. From this perspective, shares have completed an important correction that alleviated overbought conditions.
On the daily chart below, we see BIIB stock marginally undercut its August lows in October, which also took place a few days before the company’s most recent earnings report. Shares then rallied into early November and have been in consolidation mode ever since.
Given the bigger picture support area from this autumn, I expect a break above the horizontal resistance line around $302, which would target a run to the $325 to $330 area.
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As of this writing, Serge did not hold a position in any of the aforementioned securities.
