Investors Whipsawed By V-Shaped Rally
NASDAQ at New Highs 4631
DOW at New Highs 17,390
Investors got what was forecasted-a volatile October that moved from fear to greed in two weeks! The market was buffeted by the Ebola scare, macro analysts decrying easy money from the FED and a potential global economic slowdown. But fears were tempered by good corporate earnings, low energy prices for consumers and a GDP growth rate of 3.5%. And the dreaded end of QE failed to spook investors.Biotechnology stocks continued to lead the way with strong product sales and earnings growth among the mid and large caps. The Russell 2000 Small Cap stock index (IWM) also perked up with an 8% move in October to $116.56, off a mid October bottom near $104.
Here is Rayno Life Science stocks portfolio performance YTD through October 31 with FBT at $99.5 up 43% YTD and IBB at $296 up 30% YTD.
Rayno Large Cap Biopharmaceuticals-Core Position-7 Stocks Including One ETF (FBT)… Up 34.3% YTD
Alexion Pharmaceuticals (ALXN), Amgen, Inc. (AMGN), Biogen Idec Inc. (BIIB), First Trust NYSE Arca Biotechnology Index Fund (FBT), Gilead Sciences Inc. (GILD), Regeneron Pharmaceuticals, Inc. (REGN) and Roche Holding Ltd. ADR (RHHBY). ALXN is up 44% YTD.
Rayno Mid Cap Biopharmaceuticals -5 Stocks…Up 13.2% YTD
Alkermes Plc (ALKS), Cubist Pharmaceuticals, Inc. (CBST), Pharmacyclics, Inc. (PCYC), Seattle Genetic, Inc. (SGEN) and Vertex Pharmaceuticals, Inc. (VRTX). a volatile group with VRTX up 51.6% YTD.
Rayno Diagnostics and Tools.. See Link and previous posts.
Top Five Winners YTD: Abaxis, Inc. (ABAX), Exact Sciences, Inc. (EXAS), Genomic Health, Inc. (GHDX), Hologic, Inc. (HOLX) and Illumina, Inc. (ILMN). Several others are in the green.
Top Five Losers YTD: Nanosphere, Inc. (NSPH), NanoString Technologies, Inc. (NSTG), Neogen Corp. (NEOG), Response Genetics, Inc. (RGDX) and Trinity Biotech plc (TRIB), Most of these stocks offered upside trading opportunities.
Summary
- Own a portfolio of life science stocks OR an ETF such as FBT, OR a fund such as Fidelity Select Biotechnology Fund (FBIOX).
- A portfolio should be weighted toward large caps.
- A biotech sector rally is expected to continue through January 2015 interrupted by the usual “macro minefields”.
- Watch technicals and macro game changing news.
- Although it is difficult to pick new stocks after this rally, small caps are regaining momentum and offer good trading opportunities.