2018 Rayno Biobeat #1: Market Reversal Amidst Profit Taking…Update-1

Update-1… January 17 Dow Rallies 300 Points

Market returns to the momentum mode with tax reform theme, M&A and upbeat earnings. Apple (AAPL)was a driver as a potential job creator up 1.6% on repatriation of foreign cash and contributing $350B to economy. 

Technology stocks led the way up 1.45% with non-cyclical consumer goods up 1.3%; healthcare (XLV) was up 0.96% led by United Health Group (UNH) up 2.37% on strong earnings.

Biotech stocks made up for some of yesterday’s losses with news that Celgene (CELG) down 2.6%, was rumored to be in acquisition talks with Juno Therapeutics (JUNO) up 51.8%. With the exception of CELG large cap biotechs were green led by Bristol-Myers Squibb up 3.22% after getting hit yesterday from Merck (MRK) Keytruda news.

Many Rayno Biopharma stocks were strong: ABBV, AMGN, BIIB, BLUE, BMY, GILD.

Earnings reports for major drug and biotech companies begin at the end of next week.

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Market Reversal Hits Biotech Stocks: Buyer Exhaustion or Gov Shutdown Concerns?

  • IBB down 1.23%, QQQ down 0.29% , more risky XBI down 3.1%.
  • NASDAQ down 0.51% as Momentum Eases.
  • DJI faded over 200 points from opening highs of 26,000.

Buyers resisted the early rally at the open and within the hour took profits bringing all indices down with mid and small cap biotech stocks hit harder. Materials, industrials and energy were hit hardest but they have been in a major rally over the past month however concerns  are arising with potential macro issues like the NAFTA renegotiation impact on the U.S. economy and the DACA impasse. Gold and silver were hot probably on a weak dollar and perceived macro risks.

Large Cap Biopharmaceuticals did well led by Abbvie (ABBV) up 2.1% and Merck (MRK) up over 6% on positive Keytruda lung cancer data with improved overall survival in combination with Chemotherapy. Bristol-Myers (BMY) took a 4%  hit on Keytruda news as Merck is now a perceived leader for lung cancer treatment. CELG was down 1.11%.Many large cap companies reiterated in their J.P.Morgan Healthcare Presentations last week that tax cuts would help their bottom line.Healthcare (XLV) stayed green and up 4% over the past month.

Mid-cap biopharmaceuticals were in the red abruptly losing any momentum from last week: Alnylam (ALNY) down 3.43%,  Blueprint Medicines (BPMC) down 7.5%, bluebird bio (BLUE) down 4.3%,  Neurocrine Biosciences (NBIX) down 6.49%, Tesaro (TSRO) down 5.85%. Small caps were mainly in the red and so was the IWM down 1.28%.

Disclosure: long several large caps including ABBV, ALXN, BMY, CELG, FBIOX, GILD, MRK.

Stay away from new positions and avoid XBI.

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