Biotech stocks are busy again today, as they've been for the better part of the year. But, as we've seen far too often of late, the stocks' that deserve the most attention get the least, and the biotech names that deserve the least attention seem to get the most. We'll be putting Alnylam Pharmaceuticals, Inc. (ALNY), Vascular Solutions Inc. (VASC), Life Technologies Corporation (LIFE), and Vanda Pharmaceuticals, Inc. (VNDA) into one of those two categories today.
Vascular Solutions Inc. (
VASC) and
Vanda Pharmaceuticals, Inc. (
VNDA) are by far today's hot topics. A dash of good news from each sent both stocks skyrocketing. Too bad neither of those tickers could actually hold onto those gains. In fact, the fall from the peak price (which was pretty much the high) today has now reached frustrating levels.... for anybody who jumped in after the fact.
Vanda Pharmaceuticals opened at $13.08 - a 14% pop right out of the gate. Since then, VNDA has done nothing but move lower on a massive amount of volume. Shares are currently at $11.72, or almost back where they left off on Monday.
The Vascular Solutions chart looks about the same.... a ridiculously strong open, but zero follow-through. In fact, VASC has pulled back from its peak price of $9.80 to the current price of $9.17, turning a 17% gain into a 10% gain in a matter of a couple of hours.
Though Vascular Solutions and Vanda Pharmaceuticals are clearly two different companies with two different stocks, the symptoms and the lessons taught by each today are one and the same - if the news is neither significant or new (and it wasn't in either case today), odds are good that somebody is waiting in the wings to sell their shares most other traders are buying from a knee-jerk reaction. VASC and VNDA may well deserve to go higher, but these gaps make it nearly impossible for them to do so in a straight line.
For biotech traders looking for better (read 'reliable') setup, here are a couple to consider...
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Though volatile,
Alnylam Pharmaceuticals, Inc. (
ALNY) as at least moved in predictable and consistent patterns. And as it just so happens, this biotech stock's pattern has pushed it out of a bullish phase and under a key support level. More downside could be in store.
The chart of Alnylam Pharmaceuticals speaks for itself; the rising support line that's been in place since March finally cracked a couple of weeks ago. ALNY has had ample time to recover, but hasn't. More subtly, the stock has made its first string of lower highs.
Though we still expect to see the same ebb and flow from Alnylam, it should be a case of two steps back for every one step forward from here. More philosophically, the move has sustainability that the Vanda and Vascular moves do not.
On the bullish side of the biotech fence is
Life Technologies Corporation (
LIFE)... a name we've heard little about lately, but is actually one of the better trading opportunities out there right now.
Again, the key to success with a potential breakout from Life Technologies Corporation is sustainability. And, this chart is indeed taking on a sustainable shape.
Though LIFE has paused at the ceiling around $49, taking a break here may be the best thing for it. The uptrend since last October's low has been great, but may be an open invitation to heavy profit-taking, If Life Technologies Corporation can just tread water for a while and stay I the $45/$49 range while the sellers get out and any new buyers get in, the next leg up won't be as risky.
In other words, an eventual break above $49 from LIFE will be very trade-worthy. The challenge is patience... it may take a few weeks to let the stock wind-up before that pitch is thrown. Leave it on your radar in the meantime, as long as the support line holds up. Oh, the looming upside catalyst? Life Technologies Corporation is expected to turn a profit next year.
As for Vascular Solutions and Vanda Pharmaceuticals, it's a coin toss - which is the problem. Better to wait for the charts regroup before trying to make sense of them.
If you'd like to know of any changes in our opinion of VNDA, LIFE, VASC, or ALNY (or if we officially recommend them as trades), be
sure to sign up for our free newsletter today. It's delivered 2 to 3 times per week.
