Biotech stocks have seen gains of 79%, 128%, and even 133% over the last week…
It is a sector I see gaining new traction…
So what’s causing these big gains? And how can you spot and trade them?
I’ll answer those questions and more shortly…
But before I do, I want to make sure you don’t miss this exciting live event tomorrow.
All I’m going to say about it is expect some fireworks…
Now, let’s dive into what’s been going on in the red-hot biotech sector.
Table of Contents
Hot Sectors, Headlines, and Stocks
A lot of people ask me how I spot hot sectors. It’s not a secret code or process…
It’s as simple as running your scans and seeing the results.
If you run a scan and the majority of the stock results are in one sector like biotechs — that’s a good indication that the sector is hot.
And when you see stocks in the same sector hit your scans multiple days in a row, that’s an even better sign.
So far this week, we’ve seen three big biotech gainers…
Viking Therapeutics, Inc. (NASDAQ: VKTX)
VXTX is moving on news that it will start a Phase 1 study for its oral weight loss drug.
Phase 1 is just the beginning of the tests and trials a drug has to go through before it’s approved.
But weight loss is a big problem. Obesity affects a lot of people. So this potential drug could have a huge market if it makes it through all the clinical trials and FDA approvals.
I’m not saying we believe that the company will do anything it says it will — we never believe in the company.
But you have to look at the news and how others will interpret it…
It’s similar to why I like biotechs with cancer news. It’s a disease that affects a lot of people. And people are emotionally invested in any potential cure.
That means they could get emotionally involved with the news and the stock.
After the press release came out on Tuesday morning, the Breaking News Chat team alerted that the stock also received some analyst upgrades. That likely added to this two-day rally…
The stock is also trading at 52-week highs. I’m watching this for a potential breakout over $16.50.
That might be a tough move for it to make since it dropped offering news after hours yesterday…
VKTX chart: 1-year, daily candle — courtesy of StocksToTrade.com
Biomea Fusion, Inc. (NASDAQ: BMEA)
BMEA is a higher-priced biotech that spiked after releasing earnings on Tuesday. It’s also trading at 52-week highs…
The stock jumped from around $15.50 and climbed to a high of over $36 in two days. Earnings are one of my favorite catalysts.
But don’t be fooled by the stock’s higher price…
Biotechs are often in business to sell stock. And like VKTX, BMEA isn’t any different — it dropped offering news yesterday.
If it holds up, it still could be in play over $36, but I don’t have high hopes.
BMEA chart: 1-year, daily candle — courtesy of StocksToTrade.com
Pyxis Oncology, Inc. (NASDAQ: PYXS)
PYXS has gained 128% this week. And the crazy part is — this stock doesn’t even have any news…
It started running on Monday after a report was circulated about the company. I think shorts are trying to guess the top in this one so it could have more squeeze potential over the key whole dollar and half-dollar levels.
PYXS chart: 3-day, 5-minute candle — courtesy of StocksToTrade.com
How Can You Find and Trade These Stocks?
It had all three of these stocks on its watchlist on Tuesday. And it nailed entries of $3.10 on PYXS, $24.48 on BMEA, and $12.86 on VKTX.
PYXS hit a high of $4.19, BMEA hit a high of $31.54, and VKTX hit a high of $15.49.
That’s a 35%, 28%, and 20% gain respectively.
But you’ve gotta combine the right entries with the news catalyst and ensure your potential trade checks all the boxes.
There are many different headlines that can move biotechs … The ones above are just a few examples.
I wrote about Biotechs and the different catalysts that can move them in my StocksToTrade Advisory report last September. When you join StocksToTrade Advisory you get access to all my archived reports and watchlists…
Plus, you get to see which themes, headlines, and stocks I’m watching in my Market Update videos three times a week!
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade