A Big "Breakout" Traders Must Pay Attention To

A Big "Breakout" Traders Must Pay Attention To
By Brian Hunt
June 29, 2009

Last week, we saw a development that all traders need to make special note of.

It has the potential to make you a lot of money over the coming year...

The development comes down to what I call a "breakout."

A breakout occurs when an asset reaches a new high for a given period of time. In our Penny Trends trading advisory, we monitor three-month breakouts. We believe it's a good "middle of the road" timeframe that gets us into trends early enough for big gains... but not so early that we buy assets while they are stumbling near their lows.

On Thursday, both the health care sector and the biotech sector staged breakouts. Below is this bullish action in the major health care ETF:

Many investors think health care stocks are in for rough times. The White House has made clear that it wants to wring out some profits enjoyed by many companies. This is a negative for health care stock prices.

But there's another belief out there... one that says the efforts of the White House will actually drive up health care spending. Governments can barely manage parking meters, so it wouldn't surprise us to see their efforts producing more health care spending over the coming years.

More government oversight may lower profit margins a bit, but new "health care for everyone" programs could create more demand with government aid (which, of course, comes out of your wallet). This would send more money the way of many health care companies.

This Sector is a Triple-Digit-Winner Machine

These Stocks Rise Faster Than Any Other Investment Class in the World

In Penny Trends, we don't make predictions. Sure, we develop trading plans based on our analysis of fundamental market conditions, but they take a backseat to what the market tells us. The market is never wrong. The trend is never wrong... and a trader's No. 1 job is to get on the right side of the trend.

The short-term trend is bullish for health care stocks (their close cousin biotech stocks are enjoying the same exact price action)... which means one has to be a buyer right now.

Good trading,

Brian Hunt

P.S. If you're looking to make the biggest gains from the health care and biotech uptrend, I recommend you become a Penny Trends reader soon. A good rally here will cause the market's most promising microcap players to soar. Click here if you're not a subscriber and want to learn about our latest recommendation.

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	Last	Change	52-Wk
S&P 500	900.94	+0.65%	-31.45%
Oil (USO)	37.09	-0.86%	-66.57%
Gold (GLD)	91.45	+0.58%	+4.55%
Silver (SLV)	13.68	+0.44%	-17.05%
U.S. Dollar	80.75	+0.25%	+10.78%
Euro	1.40	+0.20%	-10.94%
VIX	29.05	-5.00%	+29.57%
HUI	342.83	+3.34%	-17.08%
10-Year Yield	3.68%	0.05	-0.38

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Company	Sym	Industry
Todd Shipyards	TOD	shipbuilding
Lannett	LCI	pharma
Bovie Medical	BVX	medical devices
German American	GABC	bank
Avanir Pharma	AVNR	pharma
York Water	YORW	water utilities
ClickSoftware	CKSW	software
Kirklands	KIRK	furniture
Spectrum Pharma	SPPI	pharma
BioScrip	BIOS	health services
Cray	CRAY	mainframes
Anaren	ANEN	telecom
Atrion	ATRI	medical devices
ArQule	ARQL	pharma
Cantel Medical	CMN	medical devices
Isramco	ISRL	drilling
Dollar Thrifty	DTG	rental cars
Protalix	PLX	biotech
IMAX	IMAX	movie theatres
Noven Pharma	NOVN	pharma
Stein Mart	SMRT	clothing stores
American Capital	AGNC	residential REIT
Spartan Motors	SPAR	trucks
Lincoln Edu	LINC	education
Acme Packet	APKT	telecom
VanceInfo Tech	VIT	software
3PAR	PAR	data storage
Aruba Networks	ARUN	networks
99 Cents Only	NDN	dollar stores
Duoyuan Global	DGW	water utilities
Hatteras Financial	HTS	virtual bank
MedAssets	MDAS	health care IT
STEC	STEC	data storage
Perfect World	PWRD	online games
Rackspace	RAX	networks
Silicon Labs	SLAB	semiconductors
Amylin Pharma	AMLN	biotech
AmeriGas	APU	utility
Palm	PALM	cell phones
Valeant Pharma	VRX	pharma
Biovail	BVF	medical devices
Allscripts Misys	MDRX	health care IT
Watson Pharma	WPI	generic drugs
Cerner	CERN	health care IT
Vertex Pharma	VRTX	pharma
Kubota	KUB	heavy equipment

Company	Sym	Industry
Heckmann	HEK	acquisitions
Chemspec Intl	CPC	chemicals
Caraco Pharma	CPD	generic drugs
UTEK	UTK	business services
Pacific Capital	PCBC	bank
Immucor	BLUD	diagnostics

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