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Biotech stocks of virtually all stripes and colors moved higher Monday, rising 2% as a group amid quiet market action. But was it a moment for the CAN SLIM-driven investor to make a move into the beaten-up group? A study of the chart action among the top names in terms of fundamentals, trading liquidity and market cap produces a quick answer: not yet. It’s easy to get drawn into the hype of a day’s worth of action, especially when it’s an industry group that was once head of the class. Yet Monday’s move is just one step among 10,000 needed to get this sector back into authentic leadership shape. This is a huge group, by the way, at 414 names. Only 19 stocks, less than 5% of the total group, hold a market cap of $1 billion or more. In the 21st century, you generally need to be at least $3 billion in market value (share price times total shares outstanding) to be even considered for small-cap status. Gilead Sciences ( GILD ) currently stands tallest with a $127 billion market cap. The stock bolted nearly 3% in dull trade. On the plus side, the maker of top-notch HIV and hepatitis treatments reclaimed its 50-day moving average. On the minus side, Gilead is still miles below its falling 200-day moving average, currently near 103.78. When a healthy growth stock is primed for a breakout, it’s already trading above the long-term support line, not below it. Gilead’s RS Rating is a 28 out of a maximum 99. In other words, it’s underperforming nearly three-quarters of the entire stock market in terms of 12-month relative price performance. A savvy IBD investor focuses on those stocks with an RS Rating of 80 or higher. A good breakout tends to occur after a stock has already shown strength in the market. Are there any names within the 19 small- to big-cap group that have such an RS grade? Not at all. Opko Health ( OPK ) has the best at 45, which is still horrid. The stock is in a wrestling match with its 200-day line. Intrexon ( XON ) is second best with a 42 RS. Opko, based in Miami, sells vaccines and a variety of other pharmaceuticals. It does a lot of business in Latin America. In 2015, sales jumped 440% to $492 million. Wall Street sees the company losing 3 cents a share this year. However, it’s expected to earn 23 cents a share in 2017. Scalper1 News
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