12/24 Technicals are holding in biotech, buyers coming in, GILD up 2.8% .

Update 12/23    Second day of Sell-Off …. Caution

Biotech stocks sold off hard for the second day with the “best and biggest” down 3-4%. Analyst reports were circulating about the concerns for specialty drug (i.e. biotech blockbusters) pricing with ABBV, BIIB, CELG, GILD, REGN and others on the list. Today all these favorite large caps were in the red. Celgene (CELG) was down 6.5%.  We have favored the large caps all year but we need to consider the severity of this sell-off and whether it is reflexive year end profit taking or a longer term shift in healthcare economics. Technically speaking we have a December low on the 16th backed up by an October lower low on the 15th, so although there is no immediate cause for wholesale selling, get hedged or take some off. The XBI was down 5.16% to $179 with barely a blip up. Support for XBI is $175 then $145.

Needless to say speculative mid-cap stocks in the immuno-oncology area were pummeled : AGIO INCY MDVN PBYI PCYC etc.

Biopharmaceutical pricing issues will take a while to resolve and surely it will be an important topic at the upcoming J.P.Morgan Healthcare Conference on January 12. Hopefully volatility  will settle down over the holiday week but get ready for potential sector rotation in 2015.

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Large Cap Biopharmaceuticals Broadly Down 2-3%

Gilead (GILD) Down 14% on Pricing Concerns. Abbvie (ABBV) is down 1% to $67.

We need to stay cautious to see if pricing concerns remain an issue for large cap biotechs in 2015. Market in general was up today but energy, healthcare and materials were in the red. Overall many biotech stocks were down, but the hot IPO JUNO was up 12% to $39 with a turbo boost at the opening.

ETF Watch: FBT down 1.15%, IBB down 2.56%, XBI down 0.95%, XLV down 0.9%.

Notable large cap losers: AMGN off 3.3%, BIIB off  2.3%, REGN off 3.4% .

One of our top small cap picks Achillion (ACHN) is up 9% to new highs on data showing good potential on their short duration HCV treatment regimen.

Biotech stocks have made a huge move over the past five days so we would expect choppy trading as  volume to ratchets down for the holiday.


Update after close.

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