In This Edition...

• Market Update: At a Fork in the Road 
• Trade Updates - Two Stops to Raise or Lower 
• Interesting Activity From Two of Our Biotechs 

At a Fork in the Road

Last week I took a pretty detailed look at how the market - the S&P 500 in this case - wasn't exactly as bearish as everyone thought it might be, but was instead simply trapped in a range... between 926 and 950. Though I was generally bearish, I had no real 'supporting evidence' for my thesis. 

I also mentioned the index was bouncing back and forth between a rising support line (red) and a flat resistance line (not shown) - a situation which clearly can't continue indefinitely. 

Well, though the jury may still be technically out, as of today, stocks are literally at a fork in the road. 

The nearby chart tells the tale. The SPX fell to a low of 919.65 today, breaking what support there was around 926. Before the bears could make too much progress though, that rising support line stepped in and played a bullish role, halting the selling in its tracks (though not before some major damage was done). 

And what about the 20 day average (blue), which has frequently been a support level since March? Yeah, well, to add insult to injury, the S&P 500 pretty much closed right on it - right on the fence. Great. 

Though the answer to our questions didn't present themselves in today's charts, we're getting closer to finding them. Specifically, we're very close to breaking under the last of any potential near-term support lines. A move under 919 would do it. 

With all of that being said, I want to turn your attention away from the index charts themselves (which can be deceiving), and instead turn your attention on my alternative indicator - the CBOE Volatility Index, or VIX for short.

Though the SPX is still hanging onto its last bastion of support, the VIX - which moves inversely with the market - has already tiptoed into bearish waters by pushing above its 20 day moving average line as well as moving above a long-term resistance line (green). It's a small, subtle move for now, but an important one. 

Truthfully, I don't know if the VIX breakout will follow through; I'd really like for the VIX and the market to be in agreement when it comes to breakouts and breakdowns, and clearly they're not quite in sync just yet. I'd also be kidding myself if I said there was no chance that the VIX would even try to close the gap it left behind today, which would work in favor of the bulls. In other words, it's not time to completely pull the plug just yet. 

I have a sneaking suspicion we'll see the bulls push back a little bit tomorrow or Wednesday, but it's apt to only be a modest effort - not enough to mend today's wounds. Then, the bears are likely to step in again. Maybe it'll be Wednesday, or sometime after a decent push higher; you may want to use any temporary strength as an exit point for any iffy bullish trades you're holding. Until then though, there's not a lot to do if you haven't done it already. 

As for a landing spot, I see Fibonacci support at 846 (not shown), but I've also got an eye on 891. The former would mean a healthy 11% pullback, while the latter would only result in a 6.2% dip (and leave some more selling to be taken care of later). 

The long, long shot is a break back above 950, which would negate any bearish outlook and actually be a bullish move. That would leave us well overbought though, and even more due for a corrective move. I don't think that's what we'll be dealing with though. 
 

Trade Updates

There's not a lot of trading business to take care of today. We don't have any new trades, though I can tell you I'm sure glad we have a handful of short/bearish trades already in place. I don't want to add any new ones just yet though.

I do think a handful of open trades require some attention though.

AMAG Pharmaceuticals Inc. (AMAG)

Well, it took long enough, and we had to endure a decent rally, but this short trade finally went into the black with today's 5.3% dip. Our entry of $53.09 only translates into an unrealized gain of about 5.0% so far, but given the volatile nature of this chart, I think we're better served by starting to pay defense from here.

The key here all along was support between $52.00 and $52.50 breaking down. I thought it was going to happen in May, but the bulls wanted to give it one more shot.

Grupo Simec SAB de C.V. (SIM) 

This one's gained another 40 cents since the last time we upped the stop on May 26th, but that's enough of a move to protect. Why not move the stop up to the 20 day moving average line or so, around $6.43?

We're now up about 23% on our Grupo Simec trade.
 

Interesting Biotech Activity

We've been talking about biotech stocks ad museum over the last two weeks in the community, so I'm not terribly interested in beating the dead horse some more here. However, for those of you who've been readers of our newsletter for more than a year, you'll be interested in hearing about the recent trading activity from CEL-SCI Corp. (CVM) and BioCurex Inc. (BOCX).

BioCurex Inc. (BOCX)

We hadn't heard much from BioCurex since we took a look in March. We knew their RECAF cancer-detection test was still in the works, but a tough market environment (for stocks as well as deal-making) kept the idea on the back burner for a while.

Funny thing though... we've seen a ton of buying volume over the last month or so, with a bunch of it coming over the last two days. It was enough to send the stock from 5.5 cents to 9.0 cents.

What gives? Not sure yet. Something's usually going on when we see this kind of interest though. We'll keep an eye on it, and we suggest you do the same this week.

CEL-SCI Corp. (CVM)

CEL-SCI's pop from a couple of week's ago can be pin-pointed to something specific.... the use of the company's L.E.A.P.S. technology as part of a swine flu treatment. As with too many one-day surges from the world of biotech though, we were concerned this one would be short-lived. In fact, for the few days we saw CVM fall back from that run, the concern seemed to be fully merited.

Take a look at today's bar though (and the last several days, for that matter). The stock was up on Monday, and volume was higher. 

That's quite the opposite of last week, during which the prior week's close of 62 cents to last Friday's close of 44 cents was made on shrinking volume. Translation? In the bigger picture, it looks like there could be more buyers than sellers.

One day is not enough to get overly excited about, even if the gain was made on a day the market was selling off pretty harshly. However, it's worth keeping an eye on.

Our biggest concern was simply that CVM had move too high too fast. The concern is starting to abate though.