A Breakout Is Bubbling Under the Surface
December is usually a happy time for the stock market, but it’s different so far this year.
Biotech took it on the chin last week along with the rest of the market. The Nasdaq Biotechnology Index (NBI) shed more than 6% of its value.
But the index bounced Monday morning… and it did so off a level we have seen again and again all year, suggesting strong support for biotech stocks near their current levels.
On the year, the NBI is now near breakeven for 2018.
But if you want to know what’s really going on in biotech, the chart is not going the right place to look.
The real chart for the biotech business is one you’ll find buried in an FDA presentation posted online earlier this week:
This chart tells us one thing: Business is booming in biotech-land.
This year, the FDA has approved a record amount of brand-new drugs. These are new drugs that have high margins and high revenues too.
The FDA has been on a path toward making it easier for developers to be able to do just that.
So far this year, the FDA has met its approval date goals 100% of the time… and 95% of new drugs got approved in the first review cycle.
That includes Epidiolex, the first-ever FDA-approved cannabis-derived medicine. It also includes many other approvals ranging from new cancer therapies to anti-infectious disease drugs.
Biotech stocks might be in a slump in the short term, but the above chart gives us confidence that eventually valuations will begin to line up with reality and future potential.
That includes new biotech companies not listed in the FDA’s graph above — companies we track and trade based on clinical, regulatory and commercial catalysts. The current bearish sentiment builds us a solid low base for big gains.
Next year will be huge for biotech traders.
I expect big clinical events, with results from breakthrough therapies with blockbuster potential in everything from Alzheimer’s and liver disease to gene editing in rare disease, cancer and much, much more.
And we’ll be there, making big gains.
Ray’s Cannabis Corner
Take a look at the chart below:
This is my proprietary Pot Stock Index. Today the chart is telling us something very important about pot stocks.
Unlike the major indexes that have since smashed through their support levels and are back to their yearly lows, my Pot Stock Index is showing strong resistance at its current support level (blue line) and thus far has avoided retouching its April lows (red line).
This tells us the long-term strength of this industry is still well intact.
What we need to spark a run to the upside is a new headline-worthy catalyst to spark the buying again. That said, I think we may have it… and later this week, I’ll reveal all.
For Technology Profits Daily,
Chief Technology Expert, Technology Profits Daily