11/29/17 Market Reversal in Early Trading 11:35a -FAANG sell-off
Stocks show a rotation out of technology and into financials and cyclical consumer goods. XLK is down 2.2%, XLV up 0.66%, IBB up 0.42% with large caps holding.
11/28/17 Biotechs Treading Water But Many Good Opportunities Exist
Biotechs show a lack of momentum but are holding the five day trend line. The XBI remains above $80 but sellers are out there with low volume.
The IBB is about the same barely holding the SMA 200 line flat over five days and down 1.5% over 30 days. The IBB YTD performance is equal to the S&P but trails NASDAQ by almost 10 percentage points.
However there is plenty of news to drive small cap stocks so trading is active. For example the following small caps show good one month trends: ARRY, EDIT, ESPR, HALO, RXDX,SGMO despite weakness in the XBI. Look for trending clues among the mid-caps, thought to be the targets for future M&A, are down big over 30 days except BLUE GWPH NBIX NKTR. Although M&A rumors have cooled down clearly this “ho-hum” market rewards stocks with good news. Our portfolio is doing well YTD and we expect gains for Celgene (CELG) in 2018. In the meantime keep trolling for new ideas and hold our top picks.
Bottom Holding in Biotech: Celgene (CELG) and XBI are the Ones to Watch
Biotechs Still Weak But Should Rally Through Year-End
Postive Clinical News from Roche in Lung Cancer
The biotech sector is holding last week’s bottom as tracked by specific large caps and ETFs. The weak IBB price weighted ETF was down 0.93% today to $308 level but higher than last week’s low at $302. The IBB weakness we attributed to slower revenue growth and drug pricing issues and rhetoric from the White House. Until Q4 earnings are released in Q1 2018 we would not know 2018 guidance so the technicals rule. The small cap equal weighted XBI is our preferred trade until large caps gain momentum because it is more M&A and news driven.
Our new large cap pick is Celgene (CELG) for growth and value. CELG gapped down twice from the $145 level in early October because of revenue miss and revised guidance. It could take a while to get traction but with a FWD PE of 11.83, a P/S of 6.45, a profit margin of 31.7% and an ROE of 48% it is a good play on the sector.
One of our large cap picks Roche Holding (RHHBY) was up 5.9% today to $30.8 on news that its TECENTRIQ immune-boosting drug with Avastin delayed lung cancer with progression when added to chemotherapy.Lung cancer treatments are in early stage but expected to be a $13B market.Roche also released Phase III positive news on its HEMLIBRA drug.
Bristol-MyersSquibb (BMY) a major player in immuno-oncology was down 0.45% on the Roche news.
Although the IBB is up 273% over 10 years is has not been able to break through the 2015 highs. The SPY lags biotech up 77% over 10 years but has hit new highs despite the 2008-09 downdraft.
Disclosure: long BMY,CELG,FBIOX,RHHBY, several small caps