Global Economic Picture Not Good-Healthcare A Laggard on Rally Day

Strong housing and durable goods data supported the rally today taking the S&P up 0.95% and NASDAQ up 0.82%. Comments from the China’s Central Bank helped a recovery from a free fall in the FXI at $31.70 down from the $41 level earlier this year. The slowdown in China is spurring global concerns as they are the major buyer of commodities from emerging markets like Brazil. Despite this backdrop many U.S. sectors were strong led by financials, industrials and energy. Healthcare was among the weakest sectors up only 0.38%.

The biotech action was also subdued with the IBB holding at the $168 level up 0.4%, up 22.9% YTD and the XBI down 0.55% at $101.20, up 15% YTD. The biotech sector (IBB) is tracking NASDAQ but underperforming the QQQ over the past month down 6.69% vs 4.33%. So those who are bullish on NASDAQ stocks can buy the QQQs and still get large cap biotech performance. In the momentum category, a few of the smaller cap biopharmaceuticals got hedge fund support with Aegerion (AEGR) up 2.5%, Clovis Oncology (CLVS) up 2.05% and Sarepta (SRPT) up 3%. Former highflier Infinity Pharmaceuticals (INFI $16.56) still can’t catch a bid falling 9.95% and 52.8% YTD off a high of $50 in early April. Infinity stock was “taken over” by selected hedge funds betting on explosive news during ASCO.

Selected Diagnostics and Tools Driven By Analysts Calls: CPHD, GHDX

Rayno Life Science stocks with good strength: Exact Sciences (EXAS $13.25), Illumina (ILMN $73.66), Neogen (NEOG $54.78) and Quidel (QDEL).

Analysts were busy downgrading two stocks in the Rayno Portfolio today:

Cepheid (CPHD $33.44) down 1.15% on a Jeffries downgrade to hold on a valuation call with a target of $38.Our buy was initiated at $31.5. CPHD is a premier player in molecular diagnostics.

Genomic Health (GHDX $31.64) down 7.57% on Goldman Sell call cutting the price target to $26, forecasting a slow ramp in prostate sales uptake. We still like the stock longer term because of its positioning in genetic testing for cancer.We initiated a buy at $28.5.



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