This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech's Brighter Corners

Blue chip biotechs have been stuck in the mud since the bear market ended, as I pointed out Monday. The small- and mid-cap biotech universe, however, continues to offer speculative opportunities for aggressive traders and investors. Just be careful how you approach these volatile issues, because bad timing or misplaced sentiment can do major damage to your bottom line.

There are a number of equally valid approaches to biotech speculation. TheStreet's resident biotech guru Adam Feuerstein offers a comprehensive strategy that focuses on key drug applications with the greatest growth potential and the best prospects for approval from the Food and Drug Administration. Of course, there will be few misfires in this approach, but it can also make you a ton of money.

I prefer a different methodology, because I'm a total coward when playing these issues and am not seeking exposure to the ultimate prize -- i.e., an approved drug that can be wrapped, marketed, sold in a dozen pill shapes and capsules. Instead, I choose to play the speculator, rather than the speculation. That is, I profit exclusively from the chatter, table pounding and newsletter endorsements that these idea-rich, cash-poor stocks attract on a daily basis.

The timing strategy of this technically oriented approach is simple, yet powerful -- play the stocks into key meeting or research dates, but jump back to the sidelines before market-moving data or decisions hit the newswires. This requires familiarity with the development schedules of the companies you're trading, as well as their key milestone dates.

Even so, you're not going to avoid news exposure 100% of the time because of the FDA's fickle nature. The agency has released preliminary findings ahead of meeting dates, and drug trial results that are rushed to public view because they're much better or much worse than expectations. The good news is that these shocks should average out over time, allowing the underlying strategy to work its magic.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ARIA $9.71 0.00%
NBIX $43.37 0.00%
ONCY $0.75 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs