Be thankful for the July rally that brought you 8-10% gains.It is time to protect your portfolio and play defense as market seasonality favors the bears from mid-August through mid-October. September can be the worse month so be patient for the year-end rally.To make matters worse this market has a trading mentality where metrics and news don’t seem to matter only technical levels. Volume remains light so watch for a trend toward year-end after the November election.
Before today’s 2-3% sell-off small caps were up 3%, the S&P flat and the Dow up 2%. We are now back where we started at the beginning of the year. The NYSE ARCA Biotech Index is the bright spot up 17% YTD but the FBT is off 3.5% today. The other biotech ETF’s IBB and XBI are both off more than 3% with other indices today. Large cap pharma stocks are also down about 2% but slightly better than the market as they are perceived more defensive. The life science stock market is tracking macro trends worried more about jobs and the economy and ignoring good news.
This article from the RaynoReport presents the FED problem and the technical “triple top” on all rallies in 2010.