As consumer spending takes a hit and service-related companies continue to struggle, some sectors seem to continue to flourish -- namely, biotechnology. And for good reason.

One major reason the sector is flourishing is an aging population that seems to be prone to diseases that cause degenerate-disease rates and cancer rates to increase, driving up the demand for drugs. A second reason is that biotech companies are aiming to increase the scope of their drugs to treat more than just one disease, and to some extent, to make them safe from generic competition. Lastly, innovation is starting to glimmer in the sector as companies compete to produce the next blockbuster drug and favorable clinical trials are completed.

To take it a step further, leaders of the industry are coming together to utilize one another’s strengths. This can be seen by the merger between Roche and Genentech (DNA) and the recent takeover of Medarex (MEDX).

Some equities that should feel the impact of the increase in demand for drugs are the following:

1. PowerShares Dynamic Biotech & Genome (PBE) up 47% from a March low of $11.03 to close at $16.25 on August 5.

2. iShares NASDAQ Biotechnology (IBB) rebounding nicely from a March low of $59.05 to a $78.16 close on August 5, an increase of 32%.

3. Amgen (AMGN) closing at $62.31 on August 5 after hitting an April low of $45.11, a jump of 38%.

Although the outlook for biotech appears to be sunny, investing in equities comes with risks and implementing an exit strategy is a great way to mitigate these risks. According to the latest data from www.SmartStops.net, an uptrend in the previously mentioned ETFs and stocks would be in trouble at the following price points: PBE at $15.36; IBB at $75.76; AMGN at $58.88. Keep in mind that these price levels change on a daily basis.