Update-3 11:20a 5/17. Large Caps continue to Look Good; Defensive with dividends and a little growth.

~1% movers as of mid-day trading: AZN, BIIB,GILD, GSK, REGN. IBB lags.

Update-2 1:15p EDT Biotech stocks remain sluggish as NASDAQ rally slumps to red. Large caps favored but no traction in IBB. Small cap momentum still fading with XBI at $120 handle-the levels of November 2020. XLV holding up 0.9%.

Among 1% winners today: ABBV, GILD, REGN, RHBBY showing investors seeking safety of well known companies. More speculative areas in the red: gene therapy and mid-caps. Coronavirus plays selling off:  BNTX, MRNA, NVAX, QDEL.


Update-1 TechWreck continues with NAZ down 2.67% and XLK down 2.8%

The sell-off continues with abroad downdraft across the screen. serge cap biotechs look more defefensive so see if they can hold up tomorrow: AZN, GILD, MRK, PFE, REGN. IBB was down 1% to $146.36. Novavax (NVAX) CEO made a good report on Bloomberg but the stock was still down 7.5%.  UNH down 1.54% to $405.37.  XLV down 0.94%. Update at mid-day Thursday.


Diversification Is Key for Healthcare Portfolios

  • Biotech Stocks are in a funk and underperform within healthcare.
  • Momentum has faded in the 2021 re-balancing to value.
  • Diversify with ETFs in Medtech and Life Science funds.

If you have been reading our posts you know we have  tried to steer portfolio rebalancing toward a more diverse  portfolio within Healthcare like Medtech and Diagnostics through managed life science funds or the SPDR S&P Healthcare equipment (XHE) up 7.67% YTD. When biotech stocks are running you can see the momentum in the technicals but the smaller caps have faded off the mid-February tops and you needed to make adjustments to your portfolio. Pandemic stocks carried you through 2020 but now it’s about the re-opening of the economy.

Some notable trends from our healthcare portfolio:

  1. Note that the XBI is down 9% YTD and tat makes it harder to trade smaller cap biotechs less you have an edge. And volatility is very high.
  2. It is getting harder to pick individual stocks compared to ETFs, even with large caps. To cover health sector you may only need two ETFs: IBB and XLV.
  3. United Health (UNH) dominates the XLV up 19% YTD because of strong financial performance and tight control of medical costs.
  4. The rotation into value has hurt biotech as more investors seek the “re-opening” trade which favors industrial, retail and financial sectors. Energy and materials also soared over the past week.
  5. Small caps ETFs like THE IWM are still doing well but not helping speculative biotechs. On the other hand, the iShares Russell Value ETF (IWD) is up 19% YTD. 
  6. Momentum is gone from biotech for now as evidenced by weakness in ARKG and the XBI.
  7. Funds can occasionally outperform ETFs but not lately. You should buy them in tax deferred accounts because of the tax hit on cap gains.We own the two listed below.

innovation is a primary feature of biotechnology and good trades will be coming with next week’s small and mid cap earnings reports. Stocks to watch BNTX , QDEL and REGN.

Stock/ETF Ticker Price Wgt 11/27 %Perf Price QTR 2020 Price %Perf High P
10/25 % 1 mo. 12/31 % % Perf 5/6/21 YTD 2021
iShares NAZ Bio IBB 136 25 143.22 2.27 151.5 11.9 25.7 149.71 -1.17 170.72
iShares Russell 2k IWM 163 10 184.37 16.56 196.4 30.9 18.3 225.41 14.9 234.42
Merck MRK 80 10 79.86 2.4 81.77 -1.39 -10 78.41 -4.14 91.58
United Health UNH 330 25 337.94 5.44 350.7 12.5 19.3 417.74 19.1 417.74H
SPDR S&P Bio XBI 117 5 131.46 11.95 140.8 26.3 48 127.74 -9.26 174
Healthcare SPDR XLV 108 25 109.44 3.35 113.4 7.55 11.4 124.07 9.37 124.07H
DOW DIA 347.83 13.76 347.83H
S&P 500 SPY 422.03 12.9 422.03
NASDAQ-100 QQQ 334.09 6.52 342
T.Rowe Hlth Sci
2021 * 2.60% 101.44 11.6? 106.6
Fido Biotech
2021 * -15.6 21.26 13.75? 27.73
SPDR S&P Pharm XPH 48.68 -6.49 56
ARK Genomic ARKG 80.87 -13.29 112.47

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