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The pharmaceutical behemoth Bristol-Myers Squibb offered a healthy premium to buy out Amylin Pharmaceuticals this morning, with the latter up nearly 46% in early trading. The biotechnology sector started the year on a tear, and has barely slowed down since. As you can blatantly see, there is a huge appetite for smaller biotech firms that can offer a glimmer of a drug pipeline to the stodgy, old pharmas.
As I noted on my video recap last evening, the IBB, ETF for biotechs, is somewhat extended on its weekly and monthly timeframes. However, that is not a reason to turn bearish. In fact, I construe it as a sign of persistent strength and institutional interest. In other words, I would not be surprised to see the biotechs continue to lead as the rest of 2012 in the market unfolds.
I took some profits in two biotechs yesterday inside 12631. I continue to hold EXAS, though. As you can see on the weekly timeframe below, we have a textbook cup and handle breakout, complete with plenty of buying pressure built up. If and when the market and biotechs dip again, I will be far more interested in buying than selling.
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