An interesting phenomena is occurring in the Drug Sector.
Over the past few days the Heat Map for the drug sector (shown below) has been
showing an interesting divergence between high PowerRatings (Green) and Low
PowerRatings (Red). This tells us that there are opportunities to both the
upside and downside within this sector.
Stocks with high PowerRatings (8 or higher) have been
historically proven to outperform the S&P 500 over the next 5 sessions by up to
a 14.7 to 1 margin. Low PowerRatings have been shown to underperform the
S&P 500 over the next 5 days. These stocks should be put on a list of stocks
to avoid. More aggressive traders may want to keep an eye on these stocks
for a potential short entry.
One of the great features of Heat Maps is that we can zoom in
on a particular sector for a deeper look. Here we have a close up of the
Drug sector:
Here are a few daily charts of the some of the stocks
listed above:
Gilead Sciences (GILD | Quote | Chart | News | PowerRating)
GILD has had a major runup over the past few sessions and buying
pressure may come to an end soon. This stock should be avoided and more
aggressive traders may want to watch for a potential short entry.
LifeCell Corp. (LIFC | Quote | Chart | News | PowerRating)
LIFC shows similar characteristics to GILD above. LIFC has
a PowerRating of 3.
Acadia Pharmaceuticals (ACAD | Quote | Chart | News | PowerRating)
ACAD has been pulling back in the past few sessions and currently
has a PowerRating of 8. Keep this on your watchlist for a potential entry.
GenVec Inc.(GNVC | Quote | Chart | News | PowerRating)
GNVC also shows similar characteristics to ACAD above and has a
PowerRating of 9.
If you would like to attend a free class which covers this
research and strategy further, please
click here
for the calendar of the upcoming online classes. Topics covered include our
latest research on
entries and exits, and how to use PowerRatings with our new
Preferred Stock List.
For a free PowerRatings trial,
click here. If
you have any questions about PowerRatings or the new Stock Indicators please
feel free to email us or call 213-955-5858 ext 1.
Darren Wong
Associate Editor
darrenw@tradingmarkets.com
Reminder: We are in no way recommending the purchase or short sale of
these stocks. This article is intended for education purposes only. Trading
should be based on your own understanding of market conditions, price patterns
and risk; our information is designed to contribute to your understanding.
