Biotech Momentum Stalled: Headwinds Remain for August.Update-3 Flattish week with healthcare lagging

August 15..Update -3…Momentum slows to a walk but XBI holds the $110 handle.

• XLV flat at $107 level, IBB down 0.86% to $133.30.
• Coronavirus stocks still within 10% of 52 week highs: HOLX,REGN; weak 2020 momentum: CEMI, INO.
• Vaccine stock leaders: NVAX, MRNA.
• Gov to purchase 100M doses vaccine from: PFE, MRNA, AZN, JNJ, NVAX, GSK/SN within 2 yrs; Phase 3 underway thru Q4.
• Large cap biopharma holdings: ABBV AZN BMY GILD MRK RHHBY.

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Update-2 August 12…Nice broad rally today but biotechs lagging slightly with XBI up only 0.32% holding the $109 handle. Core holdings in coronavirus stocks did well: AZN GNMK HOLX TDOC VIR. IBB just 9% off 2020 highs at $133.81.

Update-1 August 11…Rotation and Correction:  Coronavirus Plays Sell-off

We cautioned you on July 27 Biotech Stocks Will Face Strong Headwinds near the peak of this fierce coronavirus rally.Speculation created frothy conditions backed by positive news flow on vaccines and some good earnings reports from a handful of diagnostic companies. Billion$ of government loans and grants to many large and small Dx and VX developers gave financial backing for the fight against the virus. But this week the inevitable sell-off hit many high fliers.

• The bellwether XBI was off 3.98% to $109.38 close to its 30 day low.
• Vaccine stocks are in a funk with major speculative “pure-plays” correcting today and 15-20% off their 2020 highs. BNTX MRNA INO NVAX .
• Diagnostic companies took a hit this week GNMK HOLX QDEL.
• We have trimmed some positions but our core stocks in this group  remain AZN GNMK HOLX and VIR. We trimmed back on TDOC after the merger news with Livongo.

To further complicate trading and portfolio rebalancing there was a sector shift favoring value plays such as financials and industrials. There are many crosscurrents ahead so follow technicals. Step one for new buys would be a stimulus package from congress.Step two would be some curve flattening on the virus and a faster turnaround on COVID testing.

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Biotech Momentum Stalled;  Virus Cases Surging in SouthEast US and other hotspots

• COVID Vaccine stocks off their highs-choppy trading awaits new data.
• Geopolitical tensions on China causes concern;awaiting new stimulus pandemic relief.
• Tech still strong but laggards financials(XLF) and industrials (XLI) up 2%+:

Financial assets had a strong week with a shift to lagging sectors but the NASDAQ and tech stocks were up over 2% .Some strategists urged investors to think ahead to the economic recovery and buy with 2021 in mind. Healthcare stocks lagged, XLV was flat, but the XBI popped to within about 7% of its 2020 highs. Some high flying DX stocks took a hit: GNMK, HOLX, QDEL Reports are emerging about issues on coronavirus test timing, accuracy and availability. Positive jobs data brought interest to small caps. One of our top picks since 1/15/18 Teledoc (TDOC) was down 8.84% on the mid-week merger announcement with Livigno Health, but both stocks have been up huge over 24 months.

Portfolio notes

• Core positions from chart below: AZN hold, GILD hold, GNMK trimmed, HOLX hold,TDOC trimmed, VIR hold.
• Trading COVID vaccine stocks is becoming more difficult.
• COVID testing strategy and availability heavily criticized, take profits.
• More positive over mid and longer term on antiviral plays: GILD,MRK VIR.