Harry Boxer: Watch these two biotechnology stocks – MarketWatch – MarketWatch

President Trump pressed Big Pharma executives to increase U.S. production and lower drug prices.

As biotechnology stocks have been showing momentum following a meeting between President Trump and pharmaceutical executives Tuesday, our two long investments to watch are in that sector. There are also several shorts among our charts to watch to play the potential downside in this near-term, toppy-looking stock market.

Gene-therapy company bluebird bio Inc. BLUE, -2.10% has a strong-looking chart. The stock recently broke out of a wedge pattern, in which its price range had narrowed for two months in essentially a sideways direction. The stock continued the upmove on Tuesday when it popped $5.90, or over 8%, to $74.50, and followed through for another $1.10 on Wednesday to $75.60. The stock is now positioned to challenge its recent high at $79.70 from early December. A break through there could lead to a move into the mid-$80s, followed by a next target in the mid-$90s. With short interest of 9.2 its average volume, the price advance could be further fueled by short covering.

Cara Therapeutics Inc. CARA, +0.12% a cannabis-based biotech, has been steadily climbing since the start of the year. On Wednesday, the stock popped $1.17, or 7.6%, to $16.49 on 4.7 million shares, which is huge volume for this stock, the biggest since mid-November. The stock got as high as $17.20 intraday before pulling back into the close. It is a bit extended near the top of its channel and could pull back and consolidate before its next move, but momentum could carry it a bit further toward $18.

On the short side, Carters Inc. CRI, -0.32% continues lower since its July 2016 top above $112. On Wednesday, shares in the childrens wear retailer were down another $1.05, or 1.3%, to $82.70, on 690,100 shares traded. The stock appears headed toward the bottom of its declining channel in the $73-$74 range.

Signet Jewelers Ltd. SIG, -0.95% is also continuing lower. The stock rallied from the bottom of its declining price channel to the top in the last quarter of 2016, but has since broken down. Shares fell another 66 cents to $77.01 on 1.5 million shares traded on Wednesday. Watch for a test of the late-September low in the $72-$73 range. A takeout of that could drop the stock near its channel bottom in the low- to mid-$60s.

See Harrys video chart analysis on these and other stocks.

The writer has no holdings in any securities mention in this article.

Harry Boxer is the founder of TheTechTrader.com, a live trading room featuring his stock picks, technical market analysis and live chart presentations.

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Harry Boxer: Watch these two biotechnology stocks - MarketWatch - MarketWatch