Five Star Biotech Stock Watch: Biogen Idec

Last week, Investor’s Business Daily (IBD) released its IBD 50 list of highly rated stocks.

This computer-generated list ranks U.S. stocks based on key metrics, including recent profit growth and IBD's Composite Rating. The composite rating measures return on equity, sales growth and profit margins.

Luckily for those that like biotech and pharma, the list included five large, well-capitalized drug makers. Three of those carried a 99 IBD Composite Rating, meaning they've outperformed 99 percent of all stocks in recent quarters.

One of those stocks was Biogen Idec.

The company: Biogen Idec

Ticker Symbol: BIIB

Sector: Healthcare

Industry: Biotechnology

Biogen Idec discovers, develops, manufactures and markets therapies for the treatment of multiple sclerosis (MS), neurodegenerative diseases, hemophilia and autoimmune disorders in the United States and internationally.

Take a look at the nine-month chart of Biogen Idec below with added notations:

During the last six months, Biogen has formed an important level of support at $270 that should be monitored on any future pullbacks.

In addition, the stock seems to have created a common triangle pattern over the course of the last one to two months.

Triangles are generally considered to be continuation patterns, and in Biogen’s case, the preceding trend is downward. So, one would expect the stock to eventually break the triangle support and at least fall to the $270 support, if not much lower.

Keep an eye on the triangle first for the next big move for Biogen.

Biogen Idec isn't set to release earnings again until July 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key.

BIIBBiogen Inc

$143.66-4.68%