Update 10/5/18 Very Weak Technicals after Biotech Sell-Off
- NASDAQ market closed off the lows down 1.16% at 7788.
- Biotech ETF IBB down 1.15% just above 3 month support of 116.
- Biotech ETF XBI down 1.51% at 90.45 broke downtrend line and May support at 92.
- More losers again but a several winners: e.g. BLUE,CRSP,IONS,RHHBY.
- Our new pick TSRO was up 2.63% to $42.88.
- Biggest risks ahead: trade war with China and rising rates in an economy that is debt and credit dependent.
Update at close: NASDAQ closed a little up off lows at 7879.51; China hits back on Trump claims of cyberthreats; the XBI closed near lows of the day. ACAD rallied. Risk is off.
Biotech Sell-Off in October Wake-Up Call: IBB 0ff 2.94%, XBI – 3.58%, XLV -1.45%.
Rising U.S. Yields Sparks Broad Market Sell-Off; TSY 10 Yr at 3.191%, 5 Year at 3.052%.
Geopolitical News Creates Fear in the Market: China Hacking,Trade and Crude Higher.
Prices as of 2:30P EDT
The Q3 bullish enthusiasm cooled down in a biotech sell-off triggered by a backdrop of unfavorable news with rising rates in focus. A headline story about a “Big Hack”from a unique Chinese spy chip that infiltrated major companies and possibly compromised the technology hardware supply chain, spooked investors already wary because of escalating trade war with China. Apple (AAPL) down 1.84% and Amazon denied the hacking report from Bloomberg said there was no infiltration by Chinese chips.
All major sectors were hit by the sell-off with tech stocks hit hardest NASDAQ down 2.25%, ITB home construction ETF down over 2%, emerging markets EEM down 2.81 %, China FXI down 2.95 but energy XLE holding down only 0.8% and financials (XLF) were flattish. FANG stocks were hit hard and are falling behind over the past month with Facebook (FB) the weakest falling 55 points since August. Chip stocks were down over 2%.
Biotech stocks were “red screened” across all subsectors as investors took profits from the summer rally. Keep in mind that major funds re-balanced at the end of September accounting for some of the volatility this week. Here is a brief summary of todays trading trends in biotech:
- Mid-Caps in red screen mode with big 3%+losses and not a single gainer.ven our new pick Tesaro (TSRO) was down 1.45% but holding above $40. Only a few stocks were green.
- The XBI broke the uptrend line at $91.80 just at the SMA 200 level, up only 4.9% YTD. Momentum looks exhausted.
- Large caps were red but lightly traded Swiss Roche ADR (RHHBY) held in the $30.64 range. But best performer Amgen( AMGN) was off 2.54%.
- Life Science Tools and Diagnostic stocks sold off with some high fliers near top of 52 week range : Exact Sciences (EXAS) down 6%, GenomicHealth (GHDX) down 1.85%, Illumina (ILMN) down 4.5% and PerkinElmer (PKI) down3.25% and Techne (TECH) down 3.27%.
Earnings for large cap biopharmas in coming weeks should provide guidance to top line growth and valuation metrics.
Update in am.
Disclosure: Long FBIOX TSRO and many other large and small caps; short EXAS.