John Lansing

How to Double Your Money on 3 Top Biotech Stocks

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Not too many sectors can claim that they made new all-time highs after the worst bear market that most of us can remember just a few short months after the broader market bottomed.

So, while many market pundits continue to call for a stock market correction as we enter what is historically the worst month of the year for the stock market, I offer three trades in the biotech sector.

The higher stocks in general go, the louder the predictions for disaster will be. But before we circle the months of September and October on our End of Days calendar, let's take a look at Celgene Corp. (CELG), Gilead Sciences (GILD) and Amgen (AMGN) as biotech plays that should continue the move the Amex Biotechnology Index (BTK).

First, let's review the BTK. As you can see from the chart below, it has broken out from an ascending triangle to new all-time highs.

The ascending triangle has rules that govern its shape:

• The tops of the waves peak near the same price, following a horizontal trendline.  
• The bottoms of the waves generally follow an up-sloping trendline.
• Five waves compose the ascending triangle (A-B-C-D-E), unless extended.
• Each of the A-B-C-D-E waves is composed of three sub-waves, so it has a 3-3-3-3-3 configuration.
• Volume and volatility tend to recede over the life of the pattern, but this is not a requirement.

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