Don’t let the technicals scare you. After all, it’s the technicals that will ultimately help you pick winning biotech stocks. And at the end of the day, that’s all that really matters.
So let’s get to it. Because there’s a ton of money to be made in biotechs, and I’m going to show you how to make it.
12 to 18 Months
One of the first things to do before investing is to determine the overall health of a given sector within the context of the broad stock market indices.
The first chart below is BIB – the Proshares Ultra NASDAQ Biotechnology ETF.
Ever since I first recommended biotech stocks two years ago, they have been on a tear. Although there is no indication of a top at present, chances are one is due within 12-18 months if my technical analysis of the broad stock market indices is correct.
\The BIS, or Proshares UltraShort NASDAQ Biotechnology ETF, is the complete opposite of BIB, as shown below. There is no indication that a bottom has been put in place, but when there is a reversal (12-18 months out), cash can be deployed into the new trend.
Playing ETFs can be profitable as per above, as money can be shifted out of a sector that is overbought and into the bear fund to generate money in the other direction. (*By David Petch | Monday, December 9th, 2013)