Putting It Together. Part two

Friday, October 27, 2017, The Wall Street Journal, on page B12, had an article “Celgene’s Plunge Sickens Biotech Sector.

“Celgene’s Corp biggest stock plunge in nearly 17 years propelled a popular biotechnology index to its seventh straight day of losses.

Shares declined 16% to close at 99.99 on Thursday after the company reported disappointing quarterly revenue and cut a series of long-term financial targets. Celgene’s drop was the steepest since November 2000 and carried the stock below $100 for the first time this year. The stock’s swoon weighed on the Nasdaq Biotechnology Index which fell 2.3%.”

The article compared the price action of Celgene to those of Biogen and Amgen, two other components of the Biotech index.

The following graph, not from the Wall Street Journal using some PerfectStorm indicators, should illustrate this point.

Biotech October 28

There were obvious warning signs before this decline occurred.

On October 5, Celgene stock closed below two of the Relative Strength indicators at a price of $140.01, and on October 18th the Biotech ETF IBB closed below its indicator at 335.97.

Any investor believing in my basic strategy of only being long when Relative Strength and Momentum are positive would have not been invested in Celgene after October 5th and certainly not after October 18th. ($137)

On Friday, October 27, 2017, CELG closed at $98.17, and IBB closed at 316.12. Q.E.D.