TALE OF TWO INDUSTRY GROUPS TODAY -- BIOTECHNOLOGY IS THE WILD WEST -- MID CAP AND SMALL CAP BIOTECHS ARE PERFORMING OK AS WELL -- CONDITIONS AROUND $GOLD ARE CHANGING

TALE OF TWO INDUSTRY GROUPS TODAY... Health Care continues to be a leading sector. Within healthcare, the Biotechnology sector is a rapidly changing field with huge medical advancements being made. There are currently 6 SCTR ranked large cap stocks that have really strong SCTR rankings and strong weekly charts in the Biotech industry group. At opposite extremes to the biotechnology industry is the $GOLD industry. It is starting to show positive developments starting from a position of weakness. We will drill into that today.

BIOTECHNOLOGY IS THE WILD WEST... Some of the small cap biotechnology stocks go on to become home runs. Some fail in late stage approvals. The SCTR ranking can help point investors to companies that currently have momentum in their favour. One day's news release can change everything so buyer beware (failed trails results). Using the SCTR column sorting can help narrow results fast. If you select the SCTR ranking, then the industry group columns, the search order will help you fast track your results. Using the Control F gives a drop down box that you can search on. You can see it highlighted below with the word Biotechnology.

Chart 1 displays the results for Large Cap Biotechnology stocks with high SCTR rankings.
With these very high SCTR rankings across the group, this is pushing the healthcare sector to be one of the top performing areas.

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Chart 1

Looking at them in Candleglance view on Chart 2, all of them have rallied recently. Six of eight large caps are really pushing higher. Only Alexion (ALXN) and Biogen Idec (BIIB) have low SCTR rankings at this point in time. I have posted the Biotechs in the Market Message this week as they continue to break out to new highs. 4 of the 8 made new highs this week. While the recent moves have been sharp, almost all of the charts have up sloping weekly trends.

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Chart 2

MID CAP AND SMALL CAP BIOTECHS ARE PERFORMING OK AS WELL... With the SCTR ranking tool breaking things down into Large, Mid and Small Cap, it is important to look at the SCTR rankings in all three to see a total picture. Charts 3 and 4 show the SCTR rankings for MID cap and SMALL cap biotechnology. In the Mid cap Chart 3, none of them are in the top quartile and most are just middle of the pack. I have only shown the strong small cap Biotechs on Chart 4 in the listing as there are plenty with low rankings.

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Chart 3

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Chart 4

CONDITIONS AROUND $GOLD ARE CHANGING... Gold $GOLD is trading differently compared to the gold mining stocks. In the last month, the behavior of GDXJ and GDX are showing more resilience as $GOLD has fallen. This is an important change that may prove to be the turning point for patient investors in the industry group. On Chart 5, you can see the GLD is trading near the bottom trend line. The gold mining ETF's are trading near the top of their ranges for the same period.

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Chart 5

THE BULLISH PERCENT GOLD MINERS INDEX ($BPGDM) SHOWS A DIFFERING STORY... We can also see this in the powerful information provided by the Gold Miners Bullish Percent Index ($BPGDM). As $GOLD fell back below the $1300 level, almost 10% more of the gold mining stocks in the Bullish Percent Index have gone on bullish buy signals on the PnF chart style. This is a critical change in behavior as investors get more bullish on the miners, even though $GOLD is making lower lows in the short term.

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Chart 6

Chart 7 is from last week where this change in the $BPGDM had not shown up yet but we identified $GOLD at important horizontal and trend line support. Market Message Thursday, August 21,2014

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Chart 7

$SILVER STARTS TO CHANGE ITS SHEEN... While Silver ($SILVER) has not broken out yet either, the MACD has stopped going lower and has started to turn up ever so slightly. This is too early to call it a signal, but it is a significant change that points to a more critical time to start monitoring the industry for change. I would expect $SILVER and $GOLD to pop together with the mining stocks if this all works out.

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Chart 8

Following the SCTR link on the home page, you can search for words like Gold, Precious Metals, Metals, Silver to start building a strong watch list based on SCTR's. On any browser, Control F or Command F brings up a search box for the page you are on. I showed this up top in the Biotechnology area today. The following list is not exhaustive but all of them are currently top quartile stocks.
Chart 9 is GORO which started making new year-to-date highs 2 weeks ago. Notice the MACD on this weekly chart finally moving above zero.

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Chart 9

This Goldfields (GFI) Chart 10 is having a beautiful breakout this weak above year-to-date highs.

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Chart 10

Lastly is Eldorado Gold (EGO) . We can see the SCTR ranking at 84.7 which is nice and high. It is very close to making new 52 week highs. If we look back in 2012, it tried to do the same thing back there, stalled and rolled over from $16 to $5.
This is a critical area on these charts as the MACD heads back to areas they have failed at before.

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Chart 11

I like the Bullish percent index change and some of the Gold stocks breaking out while $GOLD sits below $1300 and recently tested 2 month lows. It is starting to feel bullish. There are a lot more gold miners on the Canadian exchange. You can sort through the SCTR ranking for the Toronto Stock Exchange to get a broad listing. I used the search terms listed above Chart 9. In no particular order, GUY.TO, LSG.TO, KGI.TO, SMF.TO, AZC.TO, RIC.TO, TXG.TO, CG.TO, DCG.TO are all looking strong based on the SCTR.
If you want to buy something already in an uptrend, the Big Cap Biotechnology stocks seem to have lots of support.

Good trading,
Greg Schnell, CMT