Big Edges in Little Biotechs

Of all the sectors that have provided swing traders and active investors in stocks with the most consistent opportunities to make money buying short-term weakness and selling short-term strength over the past several weeks, then that sector may be biotechnology. Whether the broader market is going up or down – whether biotechnology stocks in general are going up and down – there always seem to be a handful of drug stocks with minds – and quantified edges – of their own.

Shares of Viropharma Inc. (NASDAQ: VPHM) have slipped into a short-term trading range over the past week, bringing a sharp, three-day sell-off in the stock to an end. Renewed selling on Thursday has taken the stock to the lower boundary of this short-term range, as well as to the edge of technically oversold territory. Any additional selling on Friday likely will result in an oversold finish heading into the weekend.

VPHM began trading on Thursday with neutral, 6 out of 10, ratings, and has earned a one-point ratings upgrade due to weakness in the stock intraday. Viropharma also has a positive, short-term edge of just over a quarter of a percent. Again, a breakdown here below the lows of the trading range is the most likely catalyst for continued ratings upgrades and, potentially, a significant edge increase, as well.

Down five days in a row to trade at new, two-week lows are shares of Perrigo Co (NASDAQ: PRGO). The selling in the stock is clearly the result of profit-taking insofar as PRGO rallied to new, 52-week highs at the beginning of the month.

With a positive edge in the short-term of more than 1%, PRGO has closed technically oversold for the past two days in a row. The stock has “consider buying” ratings of 8 out of 10.

MAP Pharmaceuticals (NASDAQ: MAPP) has had the biggest, single-day drop of any of the biotech stocks in today’s report. MAPP sold off by more than 5% on Thursday as part of a two-day pullback that has brought the stock down from a rally to new, 52-week highs. Trading in bull market territory on a consistent basis only since the beginning of February, shares of MAP Pharmaceuticals opened on Thursday with ratings of 7 out of 10, but have earned a one-point upgrade intraday, bringing MAPP to “consider buying” status with a new, 8 out of 10 rating.

Lastly, short-term traders and active investors may want to take a look at Hi-Tech Pharmacal Co Inc. (NASDAQ: HITK). The selling in HITK has been more aggressive than that in any of the other stocks noted here, with Hi-Tech Pharmacal closing lower for eight out of the past 10 sessions. Edging lower by three-quarters of a percent again on Thursday, HITK is trading on the edge of technically oversold territory and at new, two-week lows. HITK has ratings of 8 out of 10, putting the stock in our “consider buying” category ahead of Friday’s open.

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David Penn is Editor in Chief of TradingMarkets.com

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