Do you ever get the feeling the market is explicitly trying to aggravate you, or frustrate you into submission? If it ever happens, it's happening right now. As I suspected was a distinct possibility in yesterday's newsletter, all it took to spark a rebound from the S&P 500 on Wednesday was a move just a tad below a major support level at 1864. In other words, right when it looked like stocks were starting a more significant pullback, it switched gears again and doled out a fairly nice gain... at least for the S&P 500 and the Dow Jones Industrial Average [not so much for the NASDAQ]. In retrospect, today's action looks a lot like the action from two Mondays ago (the 28th) when the index slumped a tad below the 20-day and 50-day moving average lines on an intraday basis and then came roaring back for a solid gain. Take a look. The Dow Jones Industrial Average found support at the 20-day and 50-day moving average lines rather than moving below them, but the end result was the same - the bulls used the lull as a re-entry point. And on both of the charts above, the volume behind the buying effort was pretty strong... strong enough to say the rebound effort had a lot of participation. Even though the NASDAQ closed in the red today, it still closed well above its lows, acting as if it wants to hit the ground running in a bullish direction come Thursday. So now what? Well, while the turnaround was nice, the mid-day reversal still hasn't solved the problem that's been nagging us for weeks now. That problem is 1895 for the S&P 500, and 16,580 for the Dow. We can even add that the NASDAQ has a problem with resistance at 4124, though I'd also add 4146 to the list of the NASDAQ Composite's problems at this point. Until we can clear these hurdles (or until we finally break down once and for all - I don't even care which), all the market's day-to-day volatility means nothing. It's just irritating to watch stocks be this indecisive. Let's table any decision-making until later this week, and hope the market finally rocks its way out of this rut by then. I know it's getting a little boring but I'm telling you, just when it seems like stocks couldn't get any more stagnant is when they really start to move, adding to the frustration the market likes to dole out. We're standing ready to act, anticipating that the scales will tip one way or another very soon. We plan on being one of the first to jump on the trend once it actually develops. You'll just have to read every day to know when we make that call. A Super Mega-Trend For those of you who've been reading the newsletter for at least a few months, you'll know by now that from time to time we point out investment-worthy megatrends.... themes that take on a life of their own, and provide big rewards (even if only hype-based) for traders willing to ride the euphoria wave for a few weeks or months and then get out at what often feels like the exact worst time to get out. Previous megatrends we've looked at and successfully traded include 3D printing, water infrastructure, cyber security, and most recently, solar stocks. We tend to do pretty well with these overarching theme trades too, which is why we enjoy talking about them. Well, there's another big theme developing right now... a theme that's so big and so overarching that the term "megatrend" doesn't do it justice. I think the word "supertrend" is more descript, as this movement could last for years rather than just a few months. No more fanfare is needed - this supertrend is the advent of biosimilars. Some of you will know exactly what I'm talking about when you hear the word. For some others, that term will be brand new to you. And for others, you've heard it before, but want to know more. Just to make sure we're all on the same page, let's take a quick look at what they are and why it matters. There are a variety of ways for pharmaceutical companies to make a drug. To make a more advanced drug, however, it takes a more advanced type of production. Some of these advanced drugs consist of complex (and large) molecular formations can only be made from living tissue, like a microorganism or a plant or animal cell. Sometimes the molecular structure of a biologic drug isn't even known - its maker just knows it works. Even if the drug company can map the molecule, however, it's often impossible for another competing manufacturer to replicate the drug since that company may not know how to replicate the drug's exact development process... one of the nuances of using living tissue to create a drug. The end result is patent-like protection even if a particular complex, large-molecule biologic drug is no longer protected by a patent. Well, as it turns out, some very smart companies have actually gotten very good at figuring out the production processes of some large-molecule drugs. Their renditions may not be the exact molecule that the original drug's designer produces, but it's similar enough in terms of safety and efficacy that the FDA says the "biosimilar" drug is close enough to be approved for the same indications once the original drug's patent has expired. I could say more about the science of biosimilars. Heck, I could write a novel about biosimilars! That's not the part of this speech you or I really care about though, is it? Our interest lies in how we can use this idea to make some money. This is where it gets fun. While it wouldn't be accurate to say biosimilars are a fledgling industry, it's only been in the last couple of years that we - and the large pharmaceutical companies that are being threatened - need to bother worrying about them. With biosimilar drugs like Teva's Lonquex and Dr. Reddy's rituximab now in the works if not on the market (foreign markets thus far; see below), Amgen's Neulasta and Roche's MabThera/Rituxan are already being threatened. There are a few more biosimilars on the market already too, and there are a whole bunch more close to being ready for approval and launch, taking aim at companies that once thought their drug's formula was too complex for anyone else to re-create. As for what's at stake, the biologic cancer-treatment market is worth $40 billion alone (and it's the cancer market that developers are looking to tap first), and biosimilar oncology sales - on a worldwide basis - are expected to reach something between $6 billion and $12 billion by 2020. Not bad. Now, it all sounds pretty exciting so far. Before anyone gets ahead of themselves, however, there are some hurdles the biosimilar movement needs to clear first... especially in the United States. Many companies won't clear these hurdles, here or in any other market. First and foremost, knowing the basic molecular structure of a drug is one thing. Being able to make that molecule is another. Some estimates peg the price tag on the R&D needed to develop the manufacturing process for a large-molecule biologic between $100 million and $250 million, and that's assuming a basic understanding of the molecular structure. Right off the bat that's going to limit the number of players in the field to the better-funded outfits. Also putting the brakes on biosimilar launches in the United States is a tricky regulatory environment. There are still patent issues to be resolved, and the FDA - for lack of a more succinct way of saying it - seems to simultaneously like and dislike biosimilars. Only the companies that can navigate the political, legal, and regulatory obstacle course are suited to be on the right side of the rise of biosimilar drugs as a category in themselves. Even so, we just have to like the upside this fairly new category of drugs brings to the table. Now, in the interest of time and space, there's a lot stuff I didn't tell you. I think you have enough to get the idea though - we're at the beginning of a movement that (1) is disruptive to the status quo because (2) it puts a ton of pricing pressure on some key drugs. It'll take us years to get all the way to the end zone where biosimilars are commonly used and embraced by payers as well as healthcare providers. This is one of those trends, however, that there just doesn't seem to be any way to stop.... not unlike the advent of the internet in the late 90's (although the biosimilar movement isn't going to "change everything" the way the internet did). And, there will be some good money to be made on the way to that end zone. As for ways to play the trend, let's have that discussion another day when we have more time and room to take a decent look at a stock or two. For now, just plant this seed somewhere in your mental garden, knowing a ticker/idea will be on the way soon. Trading Ideas, When and Where You Need Them I knew this idea was in the works a while back, but I didn't want to say anything until I knew it was up and running and ready to go. Well, it's ready to go - the SmallCap Network Elite Opportunity service's trading alerts can now be delivered as a text message to your phone! It's the cherry on top of what's quite possibly the best stock-trading newsletter out there. I don't know how glued you guys are to the computer during the trading day (like me - ha), but if you're like a lot of people, you can't stay glued to a computer screen all day long; you've got other things on your plate to take care of. But, given that the Elite Opportunity is delivered during the middle of the day, it can make it tough to do those other things if there are entry and exit instructions that may be included in every afternoon's SCN EO newsletter. Well friends, the introduction of the new texting service will let you get the alert portions of the Elite Opportunity newsletter wherever you take your phone. You can place your trade right away, and then read the full commentary e-mail whenever you have a little more time to do so. That's about as simple and ideal as it gets. And how much extra does it cost to get text-message alerts? Nada. Zero. Zilch. It's a free service for anyone who subscribes to the SmallCap Network Elite Opportunity newsletter. Bottom line? If availability concerns were the only thing holding you back from becoming a member of the SCN EO, that's no longer a worry now that a texting service is available. You can still try it out to see how it works too, by using the free two-week trial offer. Here's the deal, or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/