What Sell-Off? Biotechs Cruise: CLVS, SGEN

Stocks in Sharp Sell-Off on Potential FED Rate Increase and Strong Dollar

Deflation is Still Lurking

S&P Down 1.7%, NASDAQ down 1.67%

Biotech stocks avoided the severe sell-off today apparently immune to the strong dollar, flat earnings growth and FED interest rate concerns. Although life science stocks were mixed the bellwether ETFs held their ground: FBT up 0.19% to $118.59 and the XBI up 0.36% to $225.40 both within 2% of all time highs. In late afternoon trading they were actually up about 1%.

  • Healthcare stocks were one of the strongest sectors down only 1.13%, the XLV at $71 near 52 week highs of $73.17.
  • Rayno Large Cap Biopharma stocks were down about 1% with Alexion (ALXN) taking a 1.96% hit and Gilead (GILD) was down 2.51%. Large caps were weak due to potential macro earnings impact.
  • Rayno Mid Cap Biopharma stocks had 2 decent winners: Seattle Genetics (SGEN) up 6.38% and Clovis Oncology (CLVS) up  0.23%. SGEN recently filed a BLA for ADCETRIS in Hodgkins Lymphoma and entered a Phase 1 for SEA-CD40 for advanced solid tumors. Insider buying was also up today. Two of our mid-cap picks Cubist and Pharmacyclics were taken out this year so we need to find two new picks.
  • Many immuno-oncology stocks were in the green: AGIO up 1.38%, ALNY up 2.6%, BLUE up 2.25%, MDVN up 1.38%, and PBYI up 2.58%.It could be that the Abbvie/Pharmacyclics deal has provided an underlying bid to many mid-cap biopharma stocks.

Stocks that were in the emerging growth category were stronger today because they are the least sensitive to macro news and earnings growth. Diagnostics and tools stocks were weak except for special situations.Q1 2015 earnings with a strong dollar may be a concern.The Euro has been in a 3 month downtrend off about 12% YTD to 1.0681.

We remain cautious about adding new positions other than re-balancing with ETFs. But Seattle Genetics (SGEN) already on our focus list looks good today.

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