DNA WEIGHS ON BIOTECHS -- BUT NO SERIOUS CHART DAMAGE HAS BEEN DONE YET

DNA DISAPPOINTS ... Yesterday I showed Genentech (DNA) testing chart resistance along its autumn high near 55. After the close, the big biotech company reported strong earnings but apparently not enough to impress the market. As a result, the stock has gapped down 4.4% today. The downside action has prevented a bullish breakout in the stock and is weighing on the entire biotech group. DNA is threatening to slip back under its 200-day moving average. But it's held so far over last week's low just over 51. Although no serious chart damage has been done so far, any decisive close under 51 would be turn for the worst.

Chart 1

BIOTECH ETF SELLS OFF WITH DNA ... Chart 2 shows that today's selloff in the Biotech Holders (BBH) looks similar to that of DNA. That's probably due to the fact that the stock is the biggest holding in the Holders. The BBH chart is actually stronger than that of DNA since the Biotech Holders have already broken through their autumn high. Despite today's selling initial chart support near 147.50 is still holding. Here again, no serious chart damage will have been done -- as long as the 147.50 level holds. We'll be watching closely to see if it does.

Chart 2