Biotech Breaks Out

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Last week marked the best week for U.S. stock markets in recent memory. The Dow Jones rose 2.59%; the S&P 500 leapt 4.12%; and the NASDAQ soared 5.29%.

Global markets continued to lag, as the MCSI Emerging Markets Index only rose 0.74%.

Your Bull Market Alert portfolio boasted even bigger gains, with China’s Vipshop Holdings Limited (VIPS) rocketing 11.30%; Gilead Sciences Inc. (GILD) jumping 9.89%; and The Bank of Ireland (IRE) soaring 8.85%. Gilead Sciences Inc. (GILD) also hit a new 52-week high.

Several of your positions crossed back above their 50-day moving averages and returned to a Buy. These include the The Bank of Ireland (IRE), Visa Inc. (V), Vipshop Holdings Limited (VIPS) and Gilead Sciences Inc. (GILD).

Biotech has been one of the hottest sectors in the U.S. market this year, with the Nasdaq Biotechnology index up 27.18% this year.

You already have a bet on biotechnology in your Bull Market Alert portfolio through Gilead Sciences (GILD). And this week’s Bull Market Alert recommendation increases your bets on the biotech sector through the ProShares Ultra Nasdaq Biotechnology (BIB).

BIB is a unique exchange-traded fund (ETF) that offers both a more diversified and more leveraged bet on the U.S. biotechnology sector than betting on any individual stock.

The top five holdings in the Nasdaq Biotech index include some familiar names, including:

Celgene Corporation (CELG)                        8.45%

Amgen Inc. (AMGN)                                 8.21%

Gilead Sciences, Inc. (GILD)                      8.00%

Exclusive  Keep Calm and Carry On

Regeneron Pharmaceuticals, Inc. (REGN)            7.76%

Biogen Idec Inc. (BIIB)                           7.29%

But what gives the ProShares Ultra Nasdaq Biotechnology (BIB) its kick in a rising market is its leverage. BIB’s performance corresponds to twice (2x) the daily performance of the underlying Nasdaq Biotechnology Index.

Just look at how BIB’s leveraged performance compares to its un-leveraged little brother, the iShares Nasdaq Biotechnology (IBB) ETF over the past six months.

BIB_102714

As you can see, a bet on BIB made more money than IBB. But this also came at the price of higher volatility.

So buy ProShares Ultra Nasdaq Biotechnology (BIB) today, and place your stop at $84.

With the biotech sector bouncing so strongly last week, all biotech-related options are overvalued because of a high implied volatility. So I am holding off on recommending options until the sector consolidates its recent gains.

Disclosure: I am a long-term holder of BIB in my personal portfolio.

Portfolio Update

The Bank of Ireland (IRE) jumped 8.85% last week. The European Central Bank (ECB) stress testing on 130 European banks found that all but 25 passed muster — and, of those 25, 12 have already taken steps to bridge the gaps. Although reports mentioned that some of the banks were located in Ireland, IRE was not specifically identified as one. IRE moved above the 50-day moving average (MA) last week to become a BUY.

Visa Inc. (V) added 3.63%. Visa will report earnings Wednesday after markets close. Analysts’ estimates are calling for a 12% earnings per share (EPS) gain of $2.10 and revenue forecasts for a 7% gain year-over-year to $3.19 billion. Visa’s revenue growth rate is expected to increase as well. V moved back to a BUY.

Exclusive  Booking 81.33% Gains in Bank of Ireland (IRE) options

Vipshop Holdings Limited (VIPS) rocketed 11.30%. VIPS’ mid-October pullback pushed its stock price to a short-term low of $167, spurring traders to go on an unbroken two-week-long buying spree. Vipshop is expected to report earnings on Nov. 11, after markets close. VIPS’ big rise last week also pushed it back to a BUY.

Gilead Sciences Inc. (GILD) jumped 9.89% last week to hit a new 52-week high. GILD’s recent high is important, as GILD has made three previous attempts to breach this resistance level since early September. Gilead will report earnings on Tuesday after markets close. GILD is yet another Bull Market Alert position that rose above the 50-day MA last week to become a BUY.

NEW FEATURE — Receive your alerts via text! You now can receive a text message on your cell phone to inform you whenever a trading alert is sent. To add this free new benefit to your service, please send an email to CustomerService@NicholasVardy.com with the following information and mention in the email that you want your cell phone added to your account:

  • Your Name
  • Your Zip Code
  • Your Email Address
  • Your Cell Phone number

Please note that we can only deliver text messages to cell phones with U.S. or Canadian numbers. Standard text messaging rates from your provider apply.

Nicholas Vardy

P.S. Join Me for the World MoneyShow London, Nov. 7-8

I invite you to join me for The World MoneyShow in London, Nov. 7-8, at the Queen Elizabeth II Conference Centre. I will be presenting on Saturday, Nov. 8, 3:30 – 4:30 pm. Register at no charge by calling 1-800-970-4355 and identify yourself as a Nicholas Vardy subscriber by mentioning code 036913 or by clicking this link and following the instructions.

Exclusive  Booking 71.43% Option Gains on the Japanese Rally

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

Revenue-seeking local officials who favor the passage of legislation to tax online purchases are running short of time for Congress to enact such a law before it adjourns in December.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE