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.

XBI SPDR S&P Biotech ETF daily Stock Chart


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
$B YTD 2018
Agios Pharma AGIO 81.78 0.043 4.76 36.69
Alnylam ALNY 119.1 0.899 13.39 -9.67
Anaptys Bio ANAB 104.08 0.01 2.47 3.48
ArenaPharma ARNA 39.5 0.021 1.56 9.09
Array Biopharma ARRY 16.32 0.139 3.39 20.44
AveXis AVXS 123.58 0 4.54 12.73
Blueprint Med BPMC 91.7 0.021 4.01 14.61
Esperion Ther ESPR 72.33 0 1.92 8.77
Incyte INCY 83.33 1.54 18.05 -17.41
Amicus Ther FOLD 15.04 0.0369 2.81 0.79
Foundation Med FMI 78.75 0.153 2.9 25.8
Neurocrine Bio NBIX 82.93 0.161 7.62 4.58
Nektar Therap NKTR 106.26 0.308 17.27 84.32
NovoCure NVCR 21.8 0.177 1.59 7.39
Seattle Genetics SGEN 52.34 0.482 8.63 -6.7
Serepta SRPT 74.09 0.154 4.81 27.19
First Trust Arca FBT 4.28
iSharesBIO IBB -2.09
NASDAQ-100 QQQ 1.03

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