The only sector I’m willing to buy now

The biotech sector has its own mind and often not go sync with the overall market. After a few years of gigantic upward move, biotech is undergoing a burst. It has also been an impressive decline in the past few months. While it is difficult to say the whole sector has reached its bottom, at least the risks for picking up some biotech stocks have been substantially reduced. This will be especially true for some solid biotech companies with a good technical set up. Given how extremely the overall market is overbought at the moment, I’m definitely not among the herd to chase the highs. Having said that, the biotech sector is probably the only one that is showing some glittering gems.  AMAG Pharmaceuticals (AMAG) could be one of them. This is a specialty pharmaceutical company,  focusing on the development and commercialization of drugs related to maternal health, anemia and cancer supportive care. AMAG’s acquisitions of Makena and Cord Blood Registry have proven to be a huge positive for the company. It is also actively expanding its maternal health portfolio that is very much welcome by the Street. AMAG had enjoyed a great run in the recent past, reaching its all time high of over $70. But it has really been heartbroken for its shareholders in the past 2 months to see its price being cut by 75%. It is now trading around $25. At this price, AMAG, a profitable company, is ridiculously cheap with a forward 2017 PE of only 4. It is also below its book value at the moment. Technically it appears its 9 DMA is crossing the 50 DMA, a bullish move. The most recent selloff pushed it down towards $22 but with a clear positive MACD, suggesting it is ready to move up. So I think AMAG is a good long term speculation based on its fundamentals but also likely a good short-term trading opportunity for a quick bullish move. For the short term trading, of course do watch for your downside, which could be minimized by a tight stop loss just below its recent low of $22. But I’m willing to bet for its long-term uptrend!