Market Turns Up at 3:18 EDT for 2.28% Gain in S&P: 1080 is the mark for a 2011 bottom

After a roller coaster day where stocks were ready to break the scary 1080 level on the S&P, it abruptly reversed course for a 4.1% gain from the bottom. As usual the headline (or shall we say quote) came from Europe with a comment from the European Commissioner for Economic Affairs,Olli Rehn that there is an”increasingly shared view” that the region needs a coordinated approach to the sovereign debt crisis. The market is hungry for any optimistic news from Europe and that news Twittered about was the catalyst to buy stocks (or cover shorts). With the daily volatility (^VIX) of this market reaching new highs for the year this AM,  you may be better equipped with “gamer” experience rather than a CFA.

The NASDAQ outperformed up 2.95% despite a big downdraft in Apple to the $3.55 level before recovering to $372.50 down only 0.56%. Investors  looking for an announcement on the iPhone 5 instead got the iPhone 4s. An interesting story in Zero Hedge pointed out that everyone owns AAPL, especially hedge funds, so if portfolio cash is needed the stock will be sold.

Many tech stocks (sector up 2.63%) were “steady eddies”even before the massive rally  such as ADI, CSCO,INTC and MSFT. Yahoo (YHOO) was up all day closing at $14.46 up 6.87% betting on an AliBaba deal.Healthcare stocks also recovered but less dramatically with the sector up 1.34%, but overall cyclicals and tech led the charge. The XLV healthcare ETF was quiet holding up 1% at $31.05. Biotech ETF’s tracked NASDAQ with IBB up  2.25% and XBI up 4.16%.

Biotech Bull Market Is Intact

Assuming we are at or near a Q4 bottom this would be  a good time to look at life science buys. Our reiterated buys over the past 30 days and one month/YTD performance are:

Alexion (ALXN $62.88) up 10%, up 55%.

Cubist (CBST $35.31) up 7.33%, up 65%.

GenProbe (GPRO $56.48) down 4.73%, down 3.2%.

Illumina (ILMN $39.22) down 21.2%, down 38%.

Optimer (OPTR $13.53) up 36.8%, up 19.63%.

Regeneron (REGN $57.55) down 11%, up 75%.

Seattle Genetics (SGEN $20.34) up 21.4 %, up 36%.

ViroPharma (VPHM $18.41) down 1%, up 6.29%.

We will come up with a new list for rebalancing a Q4 BIO portfolio, Start with ETF’s and stable large caps like Amgen (AMGN $54.35) and Gilead (GILD $37.88). Both have held up well YTD. Smaller caps in our universe perked up today: Albany Molecular (AMRI $3.14) and  Exact Scientific (EXAS $6.67); and the Rayno Index of 33 mid cap biopharmaceuticals was up 4.66% today.

Risk is on in biotech but we still need to hold the S&P bottom as MACRO headwinds trump sector outperformance.

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