Bond Market Stabilizes

A strong bond auction today for the 7 Year Treasury at an interest rate of 1.94% helped support the three day rally easing investor concerns about rising interest rates and liquidation of bonds. European and Japanese stocks were also up. Bond mavens Jeffrey Gundlach of DoubleLine and Pimco’s Bill Gross also chimed in, trying to allay investor concerns about US Treasury Bonds. 10 Year TSY Yields are currently in the 2.50 range with speculators calling for 3% in 2013. The TLT was up 0.73%. The rout in the bond market over the past month has shaken investor’s confidence with some analysts calling for a stable bond market before stocks can rally.

Biotech Stocks Up 6% From June 24 Bottom (IBB), but Speculative Fever Broken

All stock indices were up 0.8% as of  2:30p EDT trading with the NASDAQ in a 200 pt rally this week.The QQQ trails the IBB with biotech stocks up almost 6% over 3 days and the QQQs up only 2.5% probably due to AAPL being a laggard. Healthcare stocks in general lagged other sectors as drug stocks were mixed.Cyclicals, industrials and financials were leaders. 75% of the 50 mid-cap biopharma stocks in our index were green.

Rayno Life Science Portfolios showed a lot of green with many significant biopharma winners: Achillion (ACHN $8.19) up 1%, Albany Molecular (AMRI $12.05) up 4.45%, Immunogen (IMGN $16.97) up 3.97%, Optimer (OPTR $13.94) up 6.98%,  Regeneron (REGN $233.52) up 2%, Seattle Genetics (SGEN $31) up 1.39% and Viropharma (VPHM $28.82) up 2%.

In the Diagnostics and Tools Sector strength was evident in : Exact Sciences (EXAS $13.84) up 3.35%, Neogen (NEOG $55.33) up 1.2% and ThermoFisher (TMO $85.22) up 2.18%. Hologic (HOLX) has been a major laggard down 10% over 5 days.

Long term investors can look at Fidelity Select Biotechnology Fund (FBIOX) to add weighting.

As we approach the summer doldrums we should look for the following:

  • Downside support of the intermediate bottom in biotech near the IBB ($165) level.
  • A less speculative market in mid and small caps. High fliers will trade well below 2013 tops.
  • A move back to biotech indices trading with NASDAQ.
  • Diagnostics and tools awaiting Q2 earnings.
  • A trading range with one more test of the June bottom.


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