Small to Mid Caps Off 3%+

Our Mid-Cap Index of biotech stocks was off 3% and more today. Among the big movers down on significant volume were:

Alkermes (ALKS)  down 4.19%, Arena (ARNA) down 4.25%, Biodel (BIOD) down 9.5%, Sangamo (SGMO) down 8.75%, Jazz (JAZZ) down 4.25% and Vivus (VVUS) down 6.35%.

Mannkind (MNKD) off  44.5%
after hours will not help biotech tomorrow. The FDA deferred approval of the inhaled insulin treatment requesting two additional clinical trials.

Biotech ETF’s Down about 2.5%: FBT, IBB and XBI

Rayno Life Science Portfolio Stocks on the Downside

Ardea(RDEA), Cardiovascular Sciences(CSII), Cubist (CBST),Exelixis (EXEL),Micromet (MITI),Nektar (NKTR), Regeneron (REGN), Seattle Genetics(SGEN), Sequenom (SQNM) ViroPharma(VPHM) all were down 4% or more on volume. Tools and diagnostic stocks are faring better:

Abaxis(ABAX), Exact Sci(EXAS), GenProbe (GPRO), Illumina (ILMN) and Immucor (BLUD).

What we can learn from this sell-off:

  1. Biotech stocks follow NASDAQ and the Index was off 1.46% today.
  2. As we have said many times buy in August and sell in late January. Now everyone knows apparently.
  3. Smaller biotech stocks have a lot of “fast money” hence the volatility. Speculative stocks get hit worse.
  4. Most biotech stocks are up 20%+ since September so raising cash makes sense.
  5. Large cap biotechs and pharmas are the place to hide. e.g. ABT,AMGN, CELG,GILD,PFE,UTHR.

There was very little green on the screen today. Correction time is here. We will review the sector after the dust settles, but for now traders rule.

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