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Biotech just entered a correction, but one trader says it could be your best chance to buy

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Trading Nation: Biotech nears correction

Biotech stocks have officially entered a correction, breaking key support, but it could actually mark a tremendous buying opportunity for the beaten group.

The iShares Nasdaq Biotechnology ETF, the IBB, slid on Tuesday below its 200-day moving average on an intraday basis for the first time since May. This leg lower placed the ETF 11 percent off its 52-week highs, touched in early October.

This move comes on the back of a string of disappointing earnings for mega-cap biotech in late October, said Chad Morganlander, portfolio manager at Washington Crossing Advisors; he pointed specifically to disappointments from Gilead and Celgene. Still, he likes the space.

"This creates a window of opportunity," Morganlander said Monday on CNBC's "Trading Nation. "

"We would actually look toward overweighting the biotech industry, because we're quite positive on the health-care industry as a whole. We think that the regulatory issues, as well as government concerns, are going to be a passing issue," he added.

He recommends shares of Amgen, as he likes the company's growth prospects, with "very little debt and a lot of cash." Morganlander also sees less volatility in the stock ahead over the next one to two years.

Others are optimistic given biotech's strength relative to its plunge seen two years ago.

"One of the things that people are worried about is, are we going to get a repeat of what we saw in 2015, when the IBB crashed 40 percent in just six months. But the set-up is much, much different than it was back then," said Matt Maley, equity strategist at Miller Tabak.

The group was "wildly" outperforming the broader market that year, Maley recalled Monday in a "Trading Nation" segment on CNBC's "Power Lunch," and investors' positioning was overweight to an extreme level, along with people adding more leverage to the group. He doesn't see such behavior this year.

Since the U.S. election last November, Maley added, the group hasn't been as high-flying and doesn't appear to have the same risk of deleveraging as it did before it plunged two years ago.

Disclosure: Chad Morganlander's firm, Washington Crossing Advisors, owns shares of Amgen.