Update-3 March 19 1:41p Green Screen Day-Time to Nibble
Biotech stocks have been a little weak lately but today the XBI bounced off support of $140 which is at the 2021 low. Also I see a lot of green in my holdings including large caps that pay 3-4% dividends.
- Recent long trades: ARKG, BNTX NTLA .
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Update-2 3/17…Market Reversal: stocks move up after FED boosts economic outlook but will hold near zero rates. Healthcare stocks mixed. Speculative stocks rebounded. DOW trend stronger than NASDAQ.
- Large Caps: IBB up 0.70%, XPH up 1.12%, REGN up 2.87%, AMGN up 1.64%, BIIB up 1.63%, RHHBY up 1.14%.
- COVID Stocks: MRNA down 5.43%, NVAX up 1.45%, QDEL up 2.81%, VIR up 8.17%.
- Small caps: ARKG up 0.75%, IWC up 1.13%, IWD up 0.51%, IWM up 0.79%, XBI up 1.12%.
Update-1 3/16…10:30 am DST Genmark Diagnostics (GNMK) up 29% on Roche $1.8B Buyout
- Coronavirus plays also up today: MRNA, NVAX, QDEL
- Eli Lilly (LLY) down 8% on mixed Alzheimer’s Drug Data; slowed accumulation of tau pathology may have long term benefits.
Healthcare Stocks Are Fading as Economy Starts to Recover
- Large Biopharma stocks still offer growth and value.
- Stock picking is harder in diagnostics and vaccines.
- Balance your portfolio with small cap ETFs.
If you have been reading my recent posts you know that there has been a rotation out of technology stocks and into so-called “re-opening” or value stocks as the economy begins to recover. The coronavirus pandemic triggered a big move into biotechnology stocks because of rapid developments in diagnostics therapeutics and vaccines. Now that COVID vaccines are proven to be effective we are looking forward to a 2022 recovery. The rotation into energy, financial and industrial stocks has picked up in 2021 leaving healthcare stocks lagging. Biotech can be seen as having growth and value aspects with large cap biopharma also offering a defensive posture, And small and mid-cap biotech have always had a momentum component because of drug breakthroughs and M&A.
Traders Like the Fast Lane with Speculation in Small cap Biotechs
Since our correction in late February/ early March we have seen a nice bounce back looking at the iShares MicrCap ETF (IWC) as well as the XBI. The XBI at $146.51 bounced off a daily low of $130 and is trying to get back to the $150 key support level. The (IPO) has recovered about 10% off its lows.
For a real measure of bullish sentiment in smaller cap biotechs you can venture into the ARK funds. The ARK Genomic Revolution (ARKG) at $91.80 is about 10% above 2021 lows of $80. Among the top holdings of ARKG are well known stocks we have covered over the years: TDOC, PACB, REGN and RHHBY.
See How Healthcare Stocks Lag
But healthcare and biotech are widely held so stocks-picking aside they may underperform in a recovery economy when cyclical stocks recover. Since we cover primarily healthcare, biotech, medtech and life science stocks we are not providing coverage of cyclical and tech stocks. We nave been focused on companies and stocks that were key to combating COVID.
Below you will find a chart that summarizes the performance of our Model healthcare portfolio compared to other sector ETFs.Focus on a more balanced portfolio.
- The DOW is up 7.36% YTD leading the NASDAQ and S&P after a great week.
- Large cap biopharma can be considered a value sector with lower projected PEs for 2021.
- Momentum is fading for COVID growth stocks and stocks picking is more difficult.
- Small and mid-cap ETFS still look good: IJR, IJH, IWD, IWM and can help balance your portfolio .
Disclosure: Long ABT, ABBV, BMY, JNJ, MRK, UNH.
| PORTFOLIO | ||||||||||||
| Initial | ||||||||||||
| Stock/ETF | Ticker | Price | Wgt | 11/27 | %Perf | Price | QTR | 2020 | Price | %Perf | High P | |
| 10/25 | % | 1 mo. | 12/31 | % | % Perf | 3/13/21 | YTD | 2021 | ||||
| iShares NAZ Bio | IBB | 136 | 25 | 143.22 | 2.27 | 151.5 | 11.9 | 25.7 | 154.75 | 2.15 | 172.6 | |
| iShares Russell 2k | IWM | 163 | 10 | 184.37 | 16.56 | 196.4 | 30.9 | 18.3 | 233.59 | 19.14 | 233.59 | |
| Merck | MRK | 80 | 10 | 79.86 | 2.4 | 81.77 | -1.39 | -10 | 74.6 | 4.44 | 85 | |
| United Health | UNH | 330 | 25 | 337.94 | 5.44 | 350.7 | 12.5 | 19.3 | 356 | 7.92 | 365 | |
| SPDR S&P Bio | XBI | 117 | 5 | 131.46 | 11.95 | 140.8 | 26.3 | 48 | 146.51 | 4.07 | 174 | |
| Healthcare SPDR | XLV | 108 | 25 | 109.44 | 3.35 | 113.4 | 7.55 | 11.4 | 114.6 | 1.02 | 118.15 | |
| DOW | DIA | 328.31 | 7.36 | 328.31 | ||||||||
| S&P 500 | SPY | 394.06 | 6.45 | 394.06 | ||||||||
| NASDAQ-100 | QQQ | 315.46 | 0.8 | 336.45 | ||||||||
| T.Rowe Hlth Sci |
PRHSX
|
* | 99.33 | 0.49 | 106.6 | |||||||
| Fido Biotech |
FBIOX
|
* | 25.47 | 1.15 | 27.73 | |||||||
| SPDR S&P Pharm | XPH | 54.45 | 4.59 | 56 | ||||||||