Don't Ignore This Chart

Biotechs Weak This Morning But Look To Be Reversing At Key Support

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The Dow Jones U.S. Biotechnology Index ($DJUSBK) broke out of serious longer-term consolidation when it cleared 1800 price resistance in mid-June.  Since then, we've seen a nice uptrend, characterized by rapid advances and steady pullbacks.  The group lost nearly 120 points from Friday's intraday high to today's intraday low, however, but is attempting to print a reversing hammer on its 50 day SMA support.  Check it out:

I didn't annotate it on this chart, but the DJUSBT struggled recently (and back in July/August) after a negative divergence printed (higher price highs with lower MACD readings).  The key for this reversing candle today will be where we close because that candlestick isn't final until 4pm EST.  If the reversing candle is in place, then it would appear that Amgen (AMGN) could be a major beneficiary in the near-term as it's also trying to print a hammer at price and trendline support.

Happy trading!

Tom

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Tom Bowley
About the author: co-founded Invested Central and served as the site's Chief Market Strategist for more than 10 years. His unique trading style combines both his fundamental and technical strategies to systematically manage risk while trading. A regular contributor to StockCharts.com's bi-weekly ChartWatchers newsletter since 2006, Tom's role at StockCharts has expanded significantly since he joined the company as a full-time Senior Technical Analyst in March of 2015. Learn More
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