The H1N1 influenza strain, also commonly referred to as the swine flu, has been in the headlines most of this year. While this certainly was and remains an active flu season, it appears that the fear of this pandemic has subsided. Many flu stocks initially started rising in spring 2009 as the new strain was announced, and then had a few spikes on other news such as when the WHO declared the strain of influenza a pandemic. While many of these stocks remain well above their initial breakout points, they have slowly been deteriorating and are beginning to look sick themselves.

IN PICTURES: 20 Tools For Building Up Your Portfolio

BioCryst Pharmaceuticals, Inc. (Nasdaq:BCRX) has been one of the leading stocks for this group, rising from under $2 a share to almost $14 in the span of a few months. The initial spike in late April was met with some selling pressure, but ultimately BCRX was able to consolidate and then break out again in July. BCRX then began a much longer consolidation, trading in a range between $8 and $14. However, BCRX broke down from that channel recently, and appears to have put in a double top. The $8 area is a key level to watch, as it should now become resistance after failing to hold as support. (For related reading, check out Analyzing Chart Patterns.)

Source: StockCharts.com

Novavax, Inc. (Nasdaq: NVAX) is another flu stock that had a huge surge in late April and then settled into a consolidation. It was also able to clear the consolidation in July, much like BCRX. Unfortunately, after a large run up, NVAX began to lag its peers. After a high-volume gap in September, NVAX gapped down the next day, completing an island gap reversal pattern. This pattern often marks a top as the gap down reversal ends up trapping everyone attempting to buy the gap up "breakout". NVAX fell under the 50-day moving average soon thereafter and has remained below the average since then. It recently fell below the prior breakout area as well, which should also become an important resistance area moving forward.

Source: StockCharts.com

Sinovac Biotech, Ltd. (Nasdaq:SVA) is another flu stock that could be regarded a "leader" from a performance standpoint. SVA was able to rally from $1 a share to a high of $12.50 in just five months. Notice how the highest volume up day also marked a top in this chart. SVA has been consolidating for the past three and a half months, and is starting to test the lower area of the established trading range. In fact, SVA is actually a little below the range, and may already have begun a breakdown.

Source: StockCharts.com

We can add Quidel Corporation (Nasdaq:QDEL) to the list of flu stocks that are not acting healthy. QDEL also experienced a strong run from spring through autumn, but after falling beneath its 50-day moving average, QDEL has been heading steadily lower. It also fell beneath its 200-day moving average in late November and it hasn't been able to reclaim this average as support. Everyone who bought this stock over the past several months is underwater, and a break below the recent trading range could spark a selloff.

Source: StockCharts.com

Bottom Line
While the threat of an influenza pandemic is certainly not behind us, the action in the flu stocks is telling us that their run might be over. Once each of these stocks fell below their 50-day moving averages, they continued to gradually decline and are now breaking down from their established bases. The markets are always looking forward and in this case, they may be telling us that this threat is contained - at least for now.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing Joey Fundora did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Technical Indicators

    Four Commonly Used Indicators In Trend Trading

    No single indicator can punch a ticket to market riches, but here are four that remain popular among trend traders.
  2. Active Trading Fundamentals

    4 Stocks With Bullish Head and Shoulders Patterns for 2016 (PG, ETR)

    Discover analyses of the top four stocks with bullish head and shoulders patterns forming in 2016, and learn the prices at which they should be considered.
  3. Chart Advisor

    Uptrending Stocks Dwindle, a Few Remain (EW, WEC, WR)

    The number of uptrending stocks is shrinking, but here a few that remain in uptrends.
  4. Chart Advisor

    Trade Setups Based on Descending Trend Channels (LBTYK, RRC)

    These descending trend channels have provided reliable sell signals in the past, and are giving the signal again.
  5. Chart Advisor

    How Are You Trading The Breakdown In Growth Stocks? (VOOG, IWF)

    Based on the charts of these two ETFs, bearish traders will start turning their attention to growth stocks.
  6. Chart Advisor

    Breakout Opportunity Stocks: CPA, GNRC, WWE

    After a period of contracting volatility, watch for breakouts and bigger moves to come in these stocks.
  7. Chart Advisor

    3 Charts That Suggest Now Is The Time To Invest In Real Estate (VNQ, SPG,PSA)

    Real estate assets have some of the strongest uptrends around. We'll take a look at three candidates poised for a move higher.
  8. Chart Advisor

    Stocks With More Upside Due to Bear Traps (TAP, SPY)

    A bear trap is a pattern that typically leads to at least a short-term rise in prices. Here are stocks exhibiting the pattern.
  9. Active Trading Fundamentals

    New Traders: Trade the Market in 5 Steps

    New traders shouldn’t throw money at securities without knowing why prices move. Follow these five steps to tilt the odds in your favor.
  10. Chart Advisor

    Watch For a Bounce in These Emerging Markets (BRF, PEK)

    While downtrends are clearly in control of the direction of many emerging market ETFs, short-term indicators suggest a bounce higher could be in the cards.
RELATED FAQS
  1. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  2. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
  3. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  4. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  5. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  6. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center