Update-1 11/16 …Healthcare Stocks Underperform-Rotation or Head- Fake?

Many of our picks are up over 10% in two weeks so it is not surprising that momentum has eased.However the market has pivoted over the past few days on the expectation of COVID vaccine availability for 2021. The big news iwas the positive data on the Moderna (MRNA) up 9.58 % through the $100 mark until profit taking ensued.This has shifted the market toward “re-opening” stocks such as financials, energy and industrials.We will update this “rotation”activity tomorrow.

  • Healthcare and biotech ETFs were weaker: XLV flat down 0.17%, IBB flat at $141,  XBI up 0.48% near 2020 highs.
  • Phase 3 data on Moderna vaccine gives efficacy of 94.5%.
  • COVID vaccine laggards picked up steam: CVAC up 13.94%, INO up 14.5% to $12+ handle.
  • Large caps held their ground with some buying in BMY and GILD.
  • Small caps continue to run with all flavors of the Russell index up. The iShares Microcap Index (IWC) was up 2.36% to the $105 mark.


Healthcare Portfolio Performance-Small Stocks Perk Up!

  • Our new large cap picks have done well over the past two weeks: ABBV $85 to $99, ABT $105 to $112, MRK $75 to $81.
  • Small cap speculation racks up gains with big movers this week: BHVN ,DNLI,  NTLA, OCUL,PACB,TWST,
  • Vaccine stocks on a run: BNTX, CVAC,MRNA,NVAX,

Three weeks ago we suggested that investors stay the course with healthcare  and biotech because of potential volatility with the 2020 Election and COVID-19 cases spiking. We will summarize the performance of this ETF and stock based portfolio in one month but for now the portfolio looks good. We also gave a weighting to the portfolio to smooth out volatility. Post-election performance has been good for the sector and this week the small caps soared over 6% with the XBI up 4.35%. Usually the small cap ETFs (IWM) tracks performance of biotech stocks and the XBI is weighted toward mid and small caps.But with many small cap biotech’s near highs the day to day volatility can br highs DKr Denali Therapeutics (DNLI) at new highs then down 6.85% Friday to $65.

We have seen a big shift over the past few days toward energy, financial and industrial stocks so this would mean a shift to value stocks. Next week many retail stocks are reporting. The COVID vaccine has emboldened some traders to look ahead to the mid-2021 time frame as the economy opens up. On Friday the rally was broader with the S&P 500 up 1.36% and the DOW up 1.37%.

Healthcare and Biotech Portfolio using ETFs

Stock/ETF Ticker Price 10/25 Weight P 11/13 % Perf week
iShares NAZ Bio IBB 136 25 141.06 2.52
iShares Russell 2k IWM 163 10 173.51 6.07
Merck MRK 80 10 81.09 0.93
United Health UNH 330 25 355.67 2.37
SPDR S&P Bio XBI 117 5 125.04 4.35
Healthcare SPDR XLV 108 25 112.12 1.98

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