Update-2 6/20 10:30p PDT…. Futures are up poised for a nice rally tomorrow. Last week even healthcare stocks hit new YTD lows with the XLV down 14.91% YTD now at $119.89. Even large cap biopharma stocks have sold off over the past month.
Update-1 FED raises rates by 0.75% largest since 1994! Markets rally. So expect higher rates ahead (3%?). Dont’ get too excited until we see a follow through confirming some kind of bottom. We need stability and less volatility for longer term investors. NASDAQ up over 2%. XBI up over 3% to $65 handle.
Here are some our recent small cap biotech and healthcare trades looking better: CCXI CRSP CYRX EWH MRNA MRTX QDEL VCYT. Speculative names (see ARKG) from old momentum daze are doing better, We give traders’edge to small caps because of severe damage YTD but need support from IWD, IWM and XBI. Keep in mind that our model portfolio has a low weighting on biotech small caps.
Big Slide with Nowhere to Hide
- Technicals are broken in most market indices in a down trajectory.
- Both fiscal and monetary policy calls in 2021 helped create the turbulence.
- Energy and commodity trades provided some ballast in 2022.
The recent mini-rally the brought the XBI to the $73 level and the NASDAQ-100 (QQQ) above $300 has proven to be a bear trap. We are now testing the May lows for all major indices. The macro headwinds are too severe. Inflation fighting by the FED remains the dominant market narrative. Record high gas prices, supply chain imbalances and the War in Ukraine still present daunting issues with no resolution in sight.
Jonatha Krinsky has called for a possible downward move in the S&P 500 to the 3400 level now at 3700.
We will continue to monitor biotech and healthcare markets as seen through our model portfolio below. Healthcare stocks still remain a best bet in these volatile times but in a bear market there is nowhere to hide. Large cap biopharma stocks have held up well until the past two weeks. We briefly saw a trading window for small cap biotech as exemplified by the XBI. but last week they sold off. The excesses have been rung out of the market but with no positive macro catalysts in sight. Now there is the talk of recession with more PE Compression and yet the prospects of lower earnings estimates.
Best biopharma stocks as of 6/13/22, 6:30 am in biopharma all up YTD were: BMY, MRK and VRTX. The XLV was down about 11%.
|10/25||%||12/31||% Perf||12/31/21||% Perf||6/11/22||%Perf||
|iShares NAZ Bio||IBB||136||25||151.5||25.7||152.62||-32.3||110.48||-27.61||0.31|
|iShares Russell 2k||IWM||163||10||196.4||18.3||222.45||-22.11||178.59||-19.72||2.08|
|SPDR S&P Bio||XBI||117||5||140.8||48||111.96||-50.75||67||-40.13||-1|
|T.Rowe Hlth Sci||PRHSX||n/a||5||99.65||n/a||104||-22.32||82.6||-20.64||0.38|
|iShares U.S MedT||IHI||50||10||54.83||65.85||-11.16||51.17||-22.29||-0.35|
|Bristol Myers Sq||BMY||11.43||75.19||20.43||-1.57|