Risk Off Resumes After One Day Rally: Caution on QQQ,IBB

Major Sell-Off Early On April 17–Correction is Here with Some Technical Damage

Posted 12.15p EDT, Update at 4:56p

The rally yesterday was apparently a head fake as a major sell-off resumed today with the NASDAQ down 2.10% and the S&P down 1.7%. The gold free fall on Monday foreshadowed liquidation of equities as investors have decided to run for cash. Moreover all commodities are extremely weak. Although the word on the street has been “buy equities,there are no other alternatives” some recent earnings reports from Bank of America (BAC) and Intel (INTC)- chip stocks very weak today-  have tempered the ebullience. Today Apple chip supplier Cirrus Logic (CRUS) is being crushed 13% on missing estimates and obviously this has brought AAPL (406) down 4.5% to a 52 week low.

Materials and energy are down about 2.4% today.

Biotech Stocks Cannot Ignore NASDAQ Weakness

Most Drug Stocks Are UP: ABT, GSK, JNJ,LLY etc.

Rayno Winners today: ALKS, ARRY

Recently we speculated on what might derail the biotech bull and now we know one correlate-a major break in techs and NASDAQ, as the IBB ($164.30) was down 2.1% tick by tick with the NAZ but rallies later now down only 0.7% and well above the April lift-off from $155. MO stocks are particularly vulnerable as are mid cap biopharmaceutical stocks who have been in the sweet spot of the 2013 move up.Even the large cap biotech leaders are down on volume: Amgen (AMGN) off 2%, Gilead (GILD) off 1.7% and Regeneron (REGN) off 3.4%. Cramer has been one of the major media cheerleaders of large cap biotech stocks even today on the sell-off. We must re-iterate that these stocks have had a huge run YTD (about 30%) and Cramer is piling on the party late-beginning in 2013.The more stable healthcare ETF (XLV $47.31) is down about 1%. Mid and small cap biotechs have erased yesterdays gains and almost all 35 stocks we track are red  except one of our recent picks Alkermes (ALKS $28.75) up 12% on positive results from a Phase 2 study of ALKS 5461 for Major Depressive Disorder. We recommended ALKS at $23 paired with an Infinity (INFI) short at $48.66 for a net gain of about 15 points. Keep ALKS as a hold but cover short on INFI. Other 3%++ losers today on our radar are Albany Molecular (AMRI), Astex (ASTX), Endocyte (ECYT), Exelixis (EXEL) and Immunogen (IMGN).

Remember the QQQs also have significant weighting in large cap biotech.

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