Update on rally day 3/9/21 1:22p Biotech and Healthcare Movers per Post
Tech stocks rally on reversal trade. Biopharma positioned between value and moderate growth. COVID Vaccine stocks all up big BNTX CVAC NVAX MRNA. Small caps continue in uptrend ; IJR IWC IWM.
- Large cap biopharma movers >1%: ABBV AZN BMY REGN VRTX.
- Previous Picks: GNMK up 1.1%, GKOS up 4%, HOLX up 1.7%, RHHBY up 2.7%, TDOC up 9% UNH up 1%,
- Recent New Buys: ARKG, DRNA, QDEL, QQQ REGN
- ETFs : IBB up 3%, XBI up 5.25%, XLV up 1.3%, XPH up 2.3%.
- Funds to track: FBIOX, PRHSX.
Healthcare stocks Caught in a Market Correction: Are they Growth or Value?
- Large Cap Biopharmaceutical Stocks with Dividends offer Growth and are not overvalued based on forward PE.
- Biotech ETFS can be used to Balance a Healthcare Portfolio
- Small Caps Still Lead the Market with Cyclicals Gaining in 2021
Friday’s market action augurs well for healthcare stocks. A strong jobs report turned the market around early in trading but until we can break the current correction mode we should be cautious on adding new positions. As we have written recently, expectations for a strong economic recovery and rising rates has shifted the market toward reflation and cyclical stocks. Over the past week the S&P 500 Energy Index was up 10%, Financials 4.29%, Industrials 3.08 % and the S&P 500 Materials up 2.30%. The S&P 500 Healthcare index eked out a small gain of 0.29% and the broader based Healthcare Select SPDR (XLV) down 1.35% to $113 for the week, 1.17% YTD off 2021 highs at the $118 level.
Looking broader into healthcare stocks the recent correction hit hyper growth and speculative stocks harder. The bellwether equal weighted XBI was down last week and is still down 1.43% YTD at $138.77 a loss off over 16% for one month! The IBB recovered on Friday to the technical base level of $150.15 about flat YTD.
We are at a technical support level for the IBB and large cap biopharmas, and appears to be a good entry level for the long term. Almost all large caps were winners with Friday’s reversal AMGN, BIIB, GILD, LLY, REGN all up 2%.
But Renaissance Capital noted that the IPO Market was off 18.5% from recents highs but Friday’ reversal still looks good for 2021.
Healthcare stocks and ETFs can reduce volatility in a portfolio.. Market leadership has changed in 2021 with NASDAQ and Tech stocks down. Speculation in small cap biotechs has ebbed bringing the XBI inline with the XLV.
Next we see the impact of the $1.9T stimulus package on the market.
Here is a summary of a model Healthcare Portfolio we created in October 2020:
|Stock/ETF||Ticker||Price||Wgt||P 11/13||P 11/27||%Perf||Price||QTR||2020 Yr||Price||%Perf|
|10/25||%||1 mo.||12/31||%||% Perf||3/7/21||YTD|
|iShares NAZ Bio||IBB||136||25||141.06||143.22||2.27||151.5||11.9||25.7||150.15||0.88|
|iShares Russell 2k||IWM||163||10||173.51||184.37||16.56||196.4||30.9||18.3||217.71||11.04|
|SPDR S&P Bio||XBI||117||5||125.04||131.46||11.95||140.8||26.3||48||138.77||-1.43|
|T.Rowe Hlth Sci||
|Fido Biotech||FBIOX||*||24.36||-3.26||? higher|