Plenty Of FirePower Left In Biotech-IBB Up 2.2% At $244
Biotechnology stocks have been quite volatile and not immune to downdrafts but today they made an impressive recovery. Nonetheless I would be selective and not trade the small cap high fliers unless you did your homework and trading is your day job. Here are some trends I see from today:
1. Large Cap Biopharmaceuticals look solid with our top picks AMGN BIIB GILD up YTD and near highs however laggard REGN shows a choppy chart and up only 1.25% YTD. Celgene also is weak lately down 5% YTD. 2013 Earnings reports in early February will give us important 2014 guidance.
2. Market Indices and ETFs show nice recovery from mini-correction and up 7+% YTD. PBE chart shows unusual strength maybe due to holdings in ILMN up 31% YTD! Illumina did not flinch during recent correction but has an 18% short position. The QQQs are slightly down YTD due to weakness in AAPPL and other large cap techs.The healthcare ETF is flat YTD but has more large cap pharmas than large cap biopharmaceuticals (BIIB, GILD etc.)
3. Mid-Caps Surged with our index of 40 biotech stocks showing a green screen except EPZM down 5.57% and EXEL down 1.97 % . Institutions appear to be willing to support their favorite stocks ILMN INCY PCYC PBYI all up about 30% YTD.
Look at technical levels at the end of the week to better ascertain damage but for now most large caps and momentum favorites appear decoupled from macro fears. If your stock is down YTD consider selling it. If you are underweight add IBB or FBIOX or better still wait for further weakness.
New Quote to keep up with cult stocks: NetLaZon $979=sum of prices NFLX +TSLA+AMZN
Follow Technical Levels -Avoid High Flyers
Five Trends To Watch In Biotech-Preliminary Model
- Large Cap Biopharmaceuticals: metrics already reviewed-awaiting 2013 financial reporting.
- Key Technicals on Market indices: IBB,XBI,PBE, FBIOX, QQQ.
- Mid-Cap Emerging Growth in Immuno-Oncology: Stocks reviewed last quarter.
- Speculative small caps: many already had a melt-down.
- Healthcare Sector Strength Overall. XLV flat YTD.
Major concerns: macro environment, NASDAQ-100 now down 2.35% YTD, reversal of 10 Yr. Treasury to risk-off, excessive bullishness in January 2014 etc. Will institutional buyers support current valuation levels?