Rayno Life Science: Mid-Day Movers – IBB down 0.9%
UP
Diagnostics and Tools: Cepheid (CPHD) up 2.55%.Hologic (HOLX) up 3.7%, Response Genetics (RGDX) up 3.2%
Biopharmaceuticals: Array (ARRY) up 12.7%, Astex (ASTX) up 2.2%, Viropharma (VPHM) up 1.12%
DOWN
Alkermes (ALKS) down 4.8%, Alexion (ALXN) down 2.1%, Biogen (BIIB) down 2.26%, Exact Sciences (EXAS) down 2%, Neogen (NEOG) down 2.3%, Regeneron (REGN) down 2.3%.
————–
Biotech Sector Hits New High with IBB at $196.69 and XBI $121.29
As every day goes by we keeping looking for new stock picks in biotech and diagnostics. But as I look through the Rayno Portfolio and the resilience in this market why get greedy? Recently I came up with 3 new ideas but they were up 10% before I could finish writing them up. Just hold onto these stocks as they go up weekly, trimming a bit or adding an ETF and/or increasing your Fidelity Biotech Fund position (FBIOX), up 40% YTD. There have been two corrections in 2013, a tiny one in late May and a larger one in late June. Both corrections came with broader market sell-offs. Although some momentum stocks have not surpassed their highs, the sector has hit an all time high. The Russell 200o (IWM) is also on the move up 155 over 3 months and many biotechs are included fueling the sector.
We wrote an article earlier this year, “Is There No End to the Biotech Bull Market”? Apparently there is “no end ” for a while for the following reasons:
- There is plenty of cheap money around held by big banks, hedge funds and mutual funds–biotech is a must own.
- Retail investors are catching the buzz, feeling more secure about buying into the market.
- Unlike lagging tech stocks, biotech is less sensitive to earnings and valuations.
- M&A helps feed the bullish tone because you expect another deal will be announced.
- The healthcare sector in general shows strength overall for many reasons.
- Life Science is a growth stock sector in a slow growth economy.
What about shorting or hedging? There have been a few big shorts but if you shorted them on the way up, you had some painful months. And some hedge funds make a living squeezing stocks with large short positions.
So you still want to work harder? Every day there are more trading ideas from a multitude of sources like Seeking Alpha. In this bull market you have many investment options, even day trading is easier with the FED and the HFT wind at your backs. But over the long run it is hard to beat the sector as the returns are 25% annualized over 5 years. The “biobubblet” is here.