After leading the market for most of 2015, biotech stocks have not participated in the latest rally, a negative omen for the group, according to chart analysts.
In the past three months, the S&P health-care sector plunged 11 percent, posting the worst performance among the major S&P groups. The brunt of the losses has been centered on biotech names such as Biogen (BIIB), which is down 35 percent.
As the health-care sector and biotech in particular struggle to recover, many Wall Street firms are now advising clients to use any bounces to take money off the table.
"The Biotech Index made new relative lows yesterday [Tuesday], and while many of the names are likely stretched on the downside, oversold bounces are still an opportunity to reduce exposure," Chris Verrone, head of technical analysis at Strategas, told clients Wednesday.
"Just 30 percent of the health-care sector is in an uptrend," added Verrone, noting the lack of vitality in the group despite an 8 percent gain for the S&P 500 in the past 10 trading sessions.