Finding Strength Within A Weak Industry Group

In a perfect world, I want to trade leading stocks in leading industry groups in an uptrending market.

Unfortunately, we can't always have all three. Over the past couple weeks, we've seen a significant selloff in U.S. equities, adding much more trading risk to owning just about any stock. Even the best of the best patterns can fail in this environment and that makes individual stock picking even more valuable.

Biotech stocks ($DJUSBT) have been under significant relative pressure over the past several weeks and it's hurting even its best relative strength leaders like BioMarin Pharmaceuticals (BMRN):

Enter BioMarin Pharmaceuticals (BMRN):

This is a GREAT looking chart. Volume trends are superb. Key gap, price, and moving average support are at hand. The AD line is strong. And it's a tremendous relative performer vs. the biotech space. But there are never any guarantees, especially when the benchmark S&P 500 is failing to hold onto psychological support at 4000 and its 50-day SMA, currently at 4010.

This just means that we must remain vigilant in keeping our stops in place. BMRN seems to have every reason to turn higher from its 88.40 (bottom of gap support) to 89.90 (top of gap support) trading range. Accumulating in this area with a closing stop beneath 88 makes sense. To the upside, a target back near 97 would result in a reward-to-risk of roughly 7 to 1.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.