4/2/18 12:30P Update
Biotechs break through 2018 support levels with XBI now needs to hold December lows at $80. IBB at double bottom hit in November/December at $102 level. Watch Mid-Cap list below for sector weakness.
Biotech Bull Market Is Intact with Unusual Volatility
Biotech Stocks Will Try to Regain Bullish Footing After A Flat First Quarter
Technicals at Low End But Get Support From Double Bottom
Time for Nibbling or Trading with Caution
Biotech stocks got roughed up in the first quarter of 2018 with unusual volatility and peak prices on March 12, driven down not so much on Company or pricing policy news but rather entanglement with the tech turmoil of large cap NASDAQ stocks. The collapse of Abbvie (ABBV) from $120 to the $95 level from a failed trial may also have dampened investor sentiment. The XBI tracked the free fall with the NASDAQ-100 (QQQ) that saw massive selling from March 13-19, finally showing some bounce today. Fear took over by a spate of bad news on geopolitics, social media, driverless cars and trade tariffs possibly affecting global growth. All that grim news was against a backdrop of rising interest rates. Despite all major biotech indices taking a hit many mid-cap (>$2B Market Cap) stocks (see below) are doing well YTD because of M&A potential and anticipated clinical news.
We have clearly reached the point where stock selection will be more important than passive investing with ETFs although the XBI remains a good trading vehicle. The biotech bull market may be intact and is outperforming the S&P in 2018 but the rally has run out of momentum just as we have reached the peak values of mid-July 2015. If we break through the current double bottom as tracked by major ETFs, the bull market gets sketchy.
Here is a list of 16 mid-cap stocks that have shown strong momentum recently or in 2017 and can be an indicator of sector strength. Most have been big winners in 2018 although some of the largest like ALNY INCY and SGEN are performance losers YTD. Look for strong RSI, MACD and strong MA 50 charts. A good example of a top winner Agios Pharmaceuticals (AGIO) which began to rally in early January.
Tomorrow we will summarize large cap biopharmaceuticals performance for the first quarter.
Selected Mid-Cap Stocks
|Company||Ticker||Price $||Revs $B||MktCap||%Perf|
|First Trust Arca||FBT||4.28|