FED Policy Boosts Risk Assets -QQQs Should Outperform IBB

We expect the biotech sector to slightly underperform NASDAQ (QQQ $70.22) in light of “QE Forever” yesterday and the shift to financials, materials, tech and other risk assets. Prior to yesterday the biotech sector has outperformed NASDAQ by as much as 15 % points so it would appear that rebalancing of portfolios would mean new money would not go into biotech and defensive healthcare stocks. Moreover AAPL is up over 20% over 3 months and is a major component of the QQQ and the S&P. Indeed today the healthcare sector is negative while  the strong sectors are materials, cyclical, and energy. In particular large cap defensive dividend yielding drug stocks like Abbott (ABT $68), Merck (MRK $43.76) and Pfizer( PFE $23.76) are down 1- 2% today. Small and mid cap biotech stocks are faring better rallying with the “risk-on” mentality. However the momentum in biotech has ebbed with some speculative stocks like Pharmacyclics (PCYC $62.41) and Medivation (MDVN $100) selling off.

The Rayno Life Science Portfolio is primarily green today with Alere (ALR $20.13) up 2.34%, Illumina (ILMN 47.82) up 2.95 Regeneron (REGN $150) up 2%, Response Genetics (RGDX 1.35) up 9.76%, Quidel (QDEL $18.06) up 2.44% and Sequenom (SQNM $4.08) up 2%.

Life Science Investors should begin positioning their portfolio for Q4  gains and we are looking for new focus stocks in our portfolio particularly tools and diagnostics. We are reviewing several stocks for the Rayno Life Science focus list and among them are ChemBio (CEMI $4.33), Hologic (HOLX $20.87) and  Luminex(LMNX $20.76).

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