Rayno BioBeat #5: July 2018 Mid-Cap Momentum Fades With Rotation Into Large Caps-Healthcare Stocks Are Strong (XLV)…Updates

Aug 1 Update…overall a good day

Hot Mid-Caps: BPMC up 12.18%, NBIX up 13%, SRPT up 3.47%

Large Cap Rayno Portfolio Movers: ABBV up 1.82%,  BIIB up 2.9%, BMY up 1.48%

XLV Flat today after 6.2% run in July, FBIOX up 1.7% with LOXO,NBIX added


Momentum Faded Since Strong ASCO Rally

Rotation into Large Caps  and Healthcare Overall  in July 

Momentum faded from the meteoric pace of May and June in Q2. After a brief run in early July the hottest stocks  faded leaving the XBI down for the month. The major ETFs were unable to break through to new highs after the blistering Q2 momentum of mid-caps in June. There was a noticeable shift to large caps because of better value, dividends and less volatility. Healthcare was unusually strong maybe benefiting from a rotation out of techs, the QQQ was up only 2.1% in July. Many CEOs of large cap drug companies commented on “holding the line on drug prices” certainly in response to Trump’s tweets. The sell-off hit mid and small cap high-fliers and made ETFs a safer play in July. Here is our last review of life science ETFs and funds.

  • The XLV Healthcare SPDR ETF gained 6.2% for the month reflecting a rotation into large cap drug and services (UNH). The XLV has been a laggard YTD.
  • The IBB was gained 5% for the month and is also focused in large caps.
  • The FBT has taken over ETF leadership up 16.2% YTD close to the highs of $152.19. The FBT mix holds several mid-cap movers including one of the best life science stocks YTD Illumina (ILMN) up 44.7%.
  • The XBI underperformed in July off the high of $101.55 actually losing 1% and now is up only 9% YTD.

Here is the high momentum portfolio of mid-caps we first tracked before they took off on 5/21/18. There are only a few of these stocks that remain within or at 5% of their highs Neurocrine Bioscience NBIX up 1.2%,Seattle Genetics (SGEN) p 4.6% YTD, but in some cases the sell-off in July was over 5%, Arena (ARNA) down 13.5%, Sarepta (SRPT) down 14%. Although most of these stocks are still way up YTD.






No comments yet.

Leave a Reply