IBD's No. 1 Group Under Pressure; These 6 Key Earnings Loom; S&P 500 Futures

IBD's No. 1 Group Under Pressure; These 6 Key Earnings Loom; S&P 500 Futures

Futures for the S&P 500 index, Nasdaq 100 and Dow industrials rose slightly Tuesday morning after the major averages closed near session lows Monday.

[ibd-display-video id=2398700 width=50 float=left autostart=true]The top-rated Medical-Biomed/Biotech group fell again. Several leading biotech stocks tested key levels as Biogen ( BIIB ), Amgen ( AMGN ), Gilead Sciences ( GILD ), Celgene ( CELG ), Vertex Pharmaceuticals ( VRTX ) and Alexion Pharmaceuticals (ALXN) are all on tap with earnings this week.

S&P 500 futures rose 0.1% vs. fair value. Dow futures climbed 0.3%. Nasdaq 100 futures edged up a fraction.

The Nasdaq composite led Monday’s retreat, losing 0.6%, while the S&P 500 index fell 0.4% and Dow industrials 0.2%. The Medical-Biomed/Biotech group fell 1.1%, its ninth straight decline after hitting a 22-month high on Oct. 11. Even so, it’s still rated No. 1 out of the 197 industries that IBD tracks.

Biogen reported better-than-expected earnings Tuesday morning. Amgen and Vertex follow on Wednesday, while Celgene, Alexion and Gilead Sciences report Thursday.

In addition to Biogen, a slew of big earnings report Tuesday, including McDonald’s (MCD), United Technologies (UTX), Lockheed Martin (LMT) and General Motors (GM) before the open.

Biogen

Biogen earnings rose nearly 21% to $6.31 a share as sales climbed 4% to $3.08 billion. Analysts had expected EPS of $5.70 and revenue of $3.04 billion. Biogen is a leader in multiple sclerosis drugs and it has a new hit with Spinraza, the only spinal muscular atrophy drug on the market. But investors are also bullish on the prospects for aducanumab, which has indicated in early testing that it can reduce cognitive decline in early Alzheimer’s patients.

Biogen shares rose 1% before the market open on Tuesday. On Monday, the stock fell 2.8% to 328.55 in Monday’s stock market trading , their third straight decline, and closed just above the 5% buy zone from a 312.50 entry initially cleared at the end of August.

IBD’S TAKE: Buying or holding a stock can be risky heading into an earnings report. Here’s an earnings options strategy that can help you cash in on post-earnings stock gains, while minimizing the risk from a weak quarter.

Amgen, Vertex, Gilead

Amgen, Vertex and Gilead Sciences fell below their 50-day moving averages on Monday. Amgen closed below an old 182.70 buy point for the first time since its Sept. 11 breakout. Amgen, Vertex and Gilead are in new flat bases .

Vertex busted out in July on promising data on a new cystic fibrosis drug. Gilead Sciences is best known for its HIV/AIDS and hepatitis C drugs, but last week won FDA approval for its CAR-T drug to treat an aggressive form of non-Hodgkin lymphoma. The drug, Yescarta, comes from Gilead’s recent acquisition of Kite Pharma.

Gilead earnings are expected to fall 24% to $2.08, as hepatitis C drug sales tumble. Amgen EPS is seen up 2% to $3.09. Vertex earnings are expected to go vertical, surging 131% to 37 cents.

Celgene

Celgene shares rose 0.9% on Monday, but that’s after tumbling 10.8% on Friday. Celgene scrapped late-stage trials on a Crohn’s disease treatment. Wall Street forecasts a 19% EPS gain to $1.88.

Alexion

Alexion retreated 2.75% on Monday, undercutting the low of its short flat base. Alexion dropped below its 50-day moving average on Friday.

Alexion earnings are expected to rise 8% to $1.33.

Biotech ETF IBB

One popular way to avoid stock-specific risks in biotech is via ETFs. The iShares Nasdaq Biotech (IBB) fell 1.2% to 327.74, dropping below their 50-day moving average and a 330 buy point cleared at the end of August.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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