8/11/21 2p EDT…A sea of red in most smaller cap biotech stocks but market overall is holding up nicely. The normally stable IBB is down over 3.5% so must be the inclusion of MRNA? BNTX is down 18% to $340! Large cap biopharma is holding up except Pfizer (PFE) is down 3.62% probably related to vaccine products. EDIT continues to run up 4.68% today to $64 and off early AUG lows at $41 level; M&A target has been speculated.
8/11/21 12 N…Moderna (MRNA) down 14% to $390 level. I guess the laws of physics are holding and the momentum players are getting out.
========
8/10/21 Stay the Course in healthcare as we have outlined. We have not done a new post because of sluggish vacation time trading. But given the strong jobs report and recent trades be sure you have some diversification in so called “reopening”and cyclical stocks. The strongest stocks today were consumer defensive, energy and industrials.Vaccine stocks like Moderna have been on a tear but if you missed the run what can you do especially now that MRNA is in the S&P 500. MRNA sold off 5.72% today just short of a $200B market cap!! Smaller cap life science growth stocks have been quite volatile and momentum is gone. They were hit hard today. ARKG and XBI are flat to weak. earnings season for large caps was very strong which bodes well for the market.
As we have posted earlier seasonality is not favorable for traders. Look for a rolling rotation among the sectors.
We will summarize performance and financials for large cap Biopharma next week and our favorites have been ABBV, BMY, LLY, GILD, PFE, REGN, RHHBY, PFE. We own all of them.
=========
8/5/21…330P EDT momentum rally in mid-cap and speculative stocks! IWM up 1.7%.
ARKG up 4% (added as a trade), XBI up 3.25%.
All of our new picks continue upward trajectory: CRSP up 7.9% to $132.60, CYRX up 4.36% to $65.60, VCYT up 1.88% to $47.21.
Regeneron (REGN) up 3% to $598 after great earnings and $2B + sales of COVID-19 Ab cocktail.
============
8/3/21…At today’s Close. Healthcare stocks hit new highs today with the XLV at $134+.
Choppy Days are Ahead But Earnings Support Bulls
- Corporate earnings are favorable but jobs are not keeping pace.
- Delta COVID variant raises concern over economic recovery.
- Look to Small and Mid-Cap picks for Q4 performance.
Since October 2020 we have been focused on our healthcare and biotech portfolio and trades. Review my posts over the past year you can track the positions. Two market trends we have noted over the past several months are diminished momentum and a rolling rotation. Trades that were easy in Q1 are harder to do as we settle into a rhythm of the market that is less volatile and away from more speculative stocks. Moreover investment themes change for from growth to value and so-called “re-opening” stocks as the COVID vaccines enables consumers to travel and spend money. Despite a few dips the healthcare sector has offered good returns with the XLV up 16.65% YTD. As we noted in recent posts the biotech sector has lagged with smaller caps and the XBI down 12% YTD but the large cap weighted IBB is up 9.4% YTD.
As of 8/1/2 the market has been resilient with the S&P 500 up 17% YTD, the NASDAQ-100 up 16.1% and other subsectors: semis, oil services and financials are better than 20% YTD! Some analysts say this is as good as it gets because valuations are too high and COVID now with delta and more mutations possibly creates a lot of uncertainty. We are currently only about 1% off 2021 highs.So if we look at other periods post “summer rally” through October we have more risk and a zig-zag pattern even a major correction. Maybe you should hold 10% cash and be more diversified in case of another sector rotation.
Macro Underpinnings
You have heard ad infinitum that the major underpinning of the market is the FED keeping rates low enabling the booming housing market and favoring equities over bonds. Discretionary spending keeps pace and earnings have come in strong as expected. One major concern has been that jobs have not kept pace with the economic recovery despite the stimulus programs. The market is expecting major $T bipartisan infrastructure legislation so if politics interfere this would be bearish. Today the Ten Year Treasury yield dropped to the 1.16% level because of a soft manufacturing report.
Portfolio Rebalancing
We have found it useful over the years to set up your core biotech stocks on Yahoo or better Seeking Alpha . These platforms can track your portfolio for performance and news.
Our core positions have been Large Cap Biopharma stocks that provide growth and dividends. Many are at new 52 week highs. Our favorites have been in order of our weighting are: ABBV,BMY, REGN, RHHBY and PFE. We also own LLY and MRK. Pfizer stock broke out at $40 and is up over 19% YTD and pays a 3.64% dividend. Here are Q2 results for PFE with raised guidance of Revs $78-80B. The analyst rating is only 2.6 probably because of vaccine revenue volatility.
For investors who want to keep it simple (depending on their healthcare weighting, which is about 13% of the S&P compared to 26.6% for IT) we would recommend holding only IBB and XLV. You can allocate these two ETFs about 65/35 favoring XLV depending on your risk level. You can add our top Fund pick T.Rowe Price Health Sciences (PRHSX) for more tools and devices exposure.
Look at our original Model Healthcare Portfolio which will be updated after earnings season for Q2. If you had IBB, UNH and XLV you outperformed most stock picking unless you overweighted COVID vaccine. stocks: BNTX MRNA and NVAX.
Recently after the May correction we added a few Mid-Caps to our portfolio. Note also that the Russell 2000 (IWM) in our portfolio is up 12% YTD, but lagging most major indices.We expect smaller caps to do better in Q4 as investors seek well known small cap growth names.
We will cover news on our three new Mid-cap names in future posts. We recently picked three smaller cap growth stocks that can offer long term stock appreciation: CryoPort (CYRX), CRSPR Therapeutics (CRSP) and Veracyte (VCYT). They were good trades since mid-May but have been volatile and are off their recent highs. CYRX has an investment rating of 1.6 and both CRSP and VCYT have ratings of 2.1. When smaller cap action picks up these stocks will gain momentum.