One of the hottest stock sectors in 2013 were the biotechnology stocks. Leading biotech stocks such as Celgene Corporation (NASDAQ:CELG), Gilead Sciences Inc. (NASDAQ:GILD), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), and Amgen Inc (NASDAQ:AMGN) were some of the biggest winners last year. So far in 2014, this high growth industry group has been in correction mode. Many of the leading biotech stocks are now trading lower by 20.0 percent or more since the start of the new year. While it is safe to say that the biotech sector is severely oversold, this important industry group has not yet bottomed out.
Traders and investors can expect minor bounces in the biotech stocks from current levels, but it is not a true bottom in the industry group just yet. Remember, nothing in the stock market goes down or up in a straight line. One of the ways that traders and investors can play the entire biotech sector is to use and follow the iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB). At this time, the IBB is signaling downside to the $202.00 level. This is an area where the institutional money will likely come back in and support the biotech stocks. Until then, the bounces in the sector are likely to be just small rallies from an oversold condition.
