Biotech Bonanza Rumbles On

We have mixed markets around the World this morning as Europe is down small with some green arrows in Asia. The Shanghai Composite finally has a potent up move up 2.1% and the Nikkei holds on to yesterday’s gains.

S&P futures are flattish taking weak IBM earnings in stride and the range/trend in the index continues. Important intermediate support stands at 1830ish with the 2014 low at 1815ish. Pivot resistance stands at 1850ish.

This year is developing as many would have thought after outsized gains the past two years – with no big traction in the overall indices but stocks on the move in both directions. Stock selection tactics are key. Use our Off the Charts newsletter, Morning Note and Morning Call to help you find what’s moving.

Social media stocks could get some momentum after Facebook’s (FB) strong rally yesterday.

Facebook (FB) led the market up with almost 4% gain yesterday after holding above its 21-day EMA on Friday. The stock closed on highs, showing commitment to the strong intra-day rally. A break above the current pivot high of $59 could bring in more buyers so keep an eye on this social play.

Twitter (TWTR) continued to build a base above its 8-day EMA showing commitment to the rally off of lows from $55-57 last week. A break above yesterday’s high of $63.44 could set it back in motion for some additional upside momentum.

Yelp! (YELP) has been hovering at highs. There is no real set-up at the moment, but as long as it continue to hold above the 8-day EMA at $79.90ish, it’s bullish composure could stay intact.

LinkedIn (LNKD) found some support at its 8- and 21-day EMAs at the $218 area yesterday to contain the damage from Friday’s potent pull back. Use yesterday’s low of $218 as the new support level to trade against if you’re interested in this lower level.

High beta tech stocks continue to provide select opportunities.

Apple (AAPL) had a nice rally off of Friday’s low to give us a nice trade early yesterday. The stock ran into some resistance at $550 but managed to close well off of lows. A break above $550 could lead to additional upside momentum. The stock has room to $560 after that.

After a two-day rally, Amazon (AMZN) briefly broke out to new high at $407.80 yesterday. The stock closed on highs signaling potential upside follow-through. Use yesterday’s high of $407.80 as the new pivot level to trade against.

Google (GOOG) continued to show leadership as the stock put in a new high at $1164 after a few upgrades yesterday. Any dip has been buyable in this stock.

The biotech sector continues to be the story of the market with stocks in the sector taking turns breaking out. I think we could see biotechs lead throughout 2014.

Yesterday Marc Sperling highlighted Biogen (BIIB) as his Trade Idea of the Week and the stock was strong all day to post a 4.38% gain.

Gilead (GILD) hit our target zone of $81 from Off the Charts with a 4.06% gain yesterday, and we will look for another base in the future to get involved as this looks like it could keep running higher.

Intercept (ICPT) and Galectin (GALT) got back on their horses yesterday to post gains of 14.35% and 11.35%, respectively, as Sperling was all over that action intraday.

Prana (PRNA), a name that has been discussed on our VTF, also staged an explosive 16.62% rally yesterday. It’s hard to chase here, but see how much of yesterday gets retraced and whether the stock could potentially form a sideways consolidation.

Quick hits:

HomeAway (AWAY) continues to build a base above its 8- and 21-day EMA. A break above the current pivot high of $42.57 could send the stock higher.

eBay (EBAY) looks interesting at this mid-level as it has reclaimed support of its 8- and 21-day EMA, but everything will have to wait for today’s earnings after the close. If it can come out with a solid report and hold higher, I think it could look poised to break above last week’s pivot high of $54.16.

Himax Technologies (HIMX) has been perking up a bit to erase some losses from last week’s two-day sell-off. The stock has been building an intermediate wedge that could resolve to the upside with a break and close above $14.

Green Mountain Coffee (GMCR) continues to base around its 8-day EMA. The longer it stays above $78.75, the higher the probability it could see higher prices.

Disclosure: Scott Redler is long HIMX, BAC, FB, AAPL, YNDX, BBRY, JBLU, EBAY calls, AAPL calls. Short SPY.

About John Darsie 46 Articles

John Darsie is the Business Editor of T3Live.com

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