5-Star Biotech Stock Watch: Aegerion Pharmaceuticals

The Nasdaq Composite got hammered Tuesday. The Russell was also slammed pretty hard.

The Russell, in particular, broke a key trendline of support, which implies more selling to come. And if you’ve been in the market this year then Tuesday's price action reminds you of March and April -- where all the small-caps and tech stocks got taken out to the woodshed.

In turn, several stocks broke lower and should continue lower with a potential market sell-off. Aegerion Pharmaceuticals AEGR is a biotech stock that certainly fits that description.

Aegerion develops and commercializes therapies for patients with debilitating rare diseases in the United States.

The company’s products include JUXTAPID and LOJUXTA hard capsules, an adjunct to a low-fat diet and other lipid-lowering treatments in patients with homozygous familial hypercholesterolemia.

Take a look at the 9-month chart of Aegerion with added notations:

Aegerion hadn’t been following the market, nor the biotech industry as a whole, for most of the year. More recently, the stock had not been able to “get off the mat”. So, an eventual breakdown probably wasn’t a surprise.

On Tuesday Aegerion broke its key support level of $30, which was also a new 52-week low. The stock is currently trading at $28.50 and should be moving lower overall from here.

Aegerion isn't set to release earnings again until the end of July.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key.

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