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One of the Most Profitable Stock Moves You're Not Hearing About

By Brian Hunt, Editor in Chief, Stansberry Research
Wednesday, March 6, 2013

After taking a short break, the biotech boom is back on...
Late last November, I told you it was time to buy biotechnology stocks again.
Regular readers know we see biotech as one of the great "boom and bust" sectors of the stock market. With its promise of individualized medicine, cancer cures, and miracle drugs, few sectors capture imaginations and speculative money as well as biotech.
As Steve Sjuggerud has written several times, if you catch a good biotech boom, you can make extraordinary gains.
From October 2011 to October 2012, biotech stocks steadily gained... but received little mainstream press. The Nasdaq Biotech Index (the NBI) climbed 50% in just a year. We alerted you to this "stealth bull market" several times.
However, like all bull markets, the biotech bull market needed a break. Every big trend needs healthy, natural corrections to shake off latecomers and restore balance.
A post-election market selloff restored that balance. The NBI fell from 1,533 to 1,339 in just weeks. But by late November, the index had dug in a "toehold" in the 1,350 area.
This marked the lowest point sellers could push the biotech sector during the selloff. It also marked a solid buy point for traders who want to profit from the uptrend in biotech. As you can see in the chart below, the sector has since soared to a new high. The NBI is up double digits since my alert.
Nasdaq Biotech Index (NBI) Hits an All-Time High
The double-leveraged fund I mentioned in November is now up more than 22%. Many individual names in the sector are up 30% or more. Even big-cap bellwether Gilead is up 19%.
But no stock or sector moves higher in a straight line. If you're not in the biotech trade, now is not the time to open a new position. Biotech is "overstretched." After that kind of move, it's reasonable to expect a pause before we see another jump higher.
If you are already in the trade, consider tightening your stops. But don't sell yet. When speculative money flows hit the biotech sector, the gains can be extraordinary.
Good trading,
Brian Hunt

Further Reading:

Biotech stocks have an incredible history of delivering quadruple-digit runs about once a decade. "And we may be in the middle of another one of those 1,000%-plus runs, right now," Steve Sjuggerud writes. Learn more here: The Next Move in the 1,000%-Plus Biotech Bull Market Starts Now.

In The Daily Crux
Market Notes
"Bull market in everything" continues… industrials (XLI), financials (XLF), health care (XLV), and consumer discretionary (XLY) sectors hit new 52-week highs.
Tech sector fund QQQ surges to a four-month high... But the sector looks cheap after trading sideways for the past year.
Transport giants FedEx and CSX break out to new 52-week highs.
Hedge-fund managers take a big loss as retailer JC Penney plunges to a four-year low.
Market Watch
Symbol Price
S&P 500 1543.80 +0.2% +14.1%
Oil (USO) 32.87 +1.0% -19.1%
Gold (GLD) 152.52 -0.5% -6.8%
Silver (SLV) 27.86 -0.9% -14.0%
U.S. Dollar 82.10 -0.5% +3.0%
Euro 1.31 +1.0% -0.4%
Volatility (^VIX) 13.15 -2.8% -31.0%
Gold Stocks (^HUI) 351.30 -0.9% -30.1%
10-Year Yield 1.99 +2.6% +1.0%

World ETFs
Symbol Price
USA (SPY) 154.69 +0.1% +16.5%
Singapore (EWS) 13.75 +0.4% +15.2%
Israel (ISL) 14.14 +0.0% +11.9%
Japan (EWJ) 10.41 -1.1% +7.6%
India (IFN) 21.69 +1.6% +8.3%
S. Korea (EWY) 61.29 -0.8% +5.6%
Taiwan (EWT) 13.59 +0.2% +4.2%
China (FXI) 38.50 +0.0% +4.3%
Canada (EWC) 28.35 +0.2% +3.5%
S. Africa (EZA) 65.18 -0.7% -1.6%
Lat.America (ILF) 44.45 +1.0% -3.5%
Russia (TRF) 15.20 -0.3% -8.6%

Sector ETFs
Symbol Price
Construction (PKB) 19.47 +0.4% +47.3%
Media (PBS) 18.65 +0.0% +29.4%
Health Care (IYH) 93.11 0.0% +27.2%
Water (PHO) 22.80 -0.3% +25.3%
Financials (IYF) 67.31 +0.4% +25.2%
Consumer Svcs (IYC) 95.03 0.0% +23.7%
Transportation (IYT) 108.15 -0.8% +20.7%
Industrials (IYJ) 80.79 +0.1% +19.1%
Real Estate (IYR) 68.84 -0.3% +18.4%
Biotech (PBE) 25.71 +0.1% +18.3%
Insurance (PIC) 19.01 +0.1% +18.3%
Software (PSJ) 29.75 -0.1% +14.4%
Defense (PPA) 22.20 +0.7% +16.0%
Telecom (IYZ) 24.06 +0.3% +12.0%
Utilities (XLU) 37.95 -0.3% +12.1%
Retail (PMR) 26.61 +0.1% +9.7%
Big Tech (QQQQ) 68.60 +0.1% +8.4%
Nanotech (PXN) 6.49 +0.0% +4.2%
Basic Mat (IYM) 70.73 +0.3% +5.2%
Semis (PSI) 15.37 +0.0% +4.8%
Alt. Energy (PBW) 4.55 -0.2% -12.4%

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