Be Wary of Ebola Stocks

Certainly a strange week in the market! Last week, I was worried about Mr. Bear. Instead, I got paid a visit by Mr. V.

Now “V” bottoms aren’t unusual, but they rarely hold up. Solid bottoms take longer to form, and there’s generally a bit of choppiness before a good uptrend resumes. Maybe this time is different, but I don’t like the odds of a continuation next week.

I looked at Procter & Gamble (NYSE:PG) a few weeks ago but wanted to revisit it because it clearly shows how strong resistance can be. In this case, PG fought hard on Friday but couldn’t quite make it. That’s fine, as we can be patient. Remember, trade on a breakout on high volume, not before.

There’s been a lot of talk about biotech companies trying to find a cure for Ebola. I’m not sure who will win (if anyone), but buying ANY of them is risky. Tekmira Pharmaceuticals (NASDAQ:TKMR) is a good case. If you want to take a flier with play money, fine. Otherwise, leave the guessing to others.

Back next week to see if the V gets stronger, or becomes a W.