Raise a Little Cash as Macro Focus Brings Choppy Action

Life Science stocks took a hit today underperforming NASDAQ which was down only 3.35 pts. The biotech sector has been pretty much on a tear since the November bottom as they re-accelerated in mid-December. The biotech ETF (IBB) shows a double top from October and the recent false breakout last friday in the $148 range. Today the IBB closed at $145 amidst a mild sell-off  which saw most  biotech stocks in the red.The QQQ was flat at $67.30 helped by a big spike in AAPL up 13.50. The Rayno Tools and Diagnostics stocks are holding up better than the Rayno Biopharmaceutical focus stocks which were among the best performers in 2012.

Macro risks near term are Congress and the March 1 budget, Eurozone fears, a weak Euro and currency chaos,and i rates rising.

Three mavens offer cautionary comments on market risk: John Bogle, Doug Kass, and Byron Wien. In the meantime the market is holding up a tad and the poster child of MO, Netflix (NFLX) is flat at $182. Large cap biotechs continue to rally.

Tools and Diagnostics stocks on our focus list that have outperformed the market over 30 days are:

Abaxis (ABAX $43.75) up 16.7%

Alere (ALR $22.39) up 13.5%

Cepheid (CPHD $36) up 9.9%

Qiagen (QGEN $20.52) up 10.2%

ThermoFisher (TMO $73.81) up 12%

We will summarize the financial metrics of our entire Dx/Tools group after all the earnings calls are in. Although many of these stocks are at new highs they should be more stable in any correction as they are supported by earnings, valuation and deal news.

MO Stocks Hardest Hit in Biopharmaceutical Sector

The biggest winners of 2012 have been taking a breather and charts tell the story: Alexion (ALXN), Amgen (AMGN), Cubist (CBST), and Regeneron (REGN) show weakness and profit taking. Biogen Idec (BIIB) and Gilead (GILD)  remain strong.Fidelty Select Biotech (FBIOX) one of the top life science funds was down 1% today but is up 8% YTD. Top holdings are usual suspects GILD, AMGN, BIIB, REGN, and CELG.

Medivation (MDVN), not on our focus list also shows a developing double top.

One of our laggards Optimer (OPTR $10.31)  popped 3 % on an upgrade from R.W.Baird and a potential upside on product sales for Dificid currently forecasted at $109M for 2013. A nice bottom has formed in the stock in the $10 area.

We expect buying opportunities to develop in Q1 but for now raise a little cash from huge winners.


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