Uncertainty Grips Markets- But December Still Looks Good

Major Indices are down as of 11 am trading amid protest in China.Apple (AAPL) is down over 2% on potential production shortfall from Foxconn.The XBI is flat at thee $81 level but large caps are strong and the IBB continues its run from the 9/27 bottom. Seasonality favors a biotech rally.

Healthcare stocks are now favored by many strategists because of their defensive nature and focus on US markets.  And biotech stocks as tracked by the IBB are gaining momentum up 7.37% MTD.With all the uncertainty  from MACRO headwinds, FEDspeak, PE compression the healthcare sector offers a refuge. And now we have China unrest due to COVID restrictions. Still as we roll into December the markets look better. Most earnings reports are factored into stock prices as we begin to ask what’s next for 2023.

Last week on 11/19 we summarized Large Cap Biopharmaceuticals which have been our top picks over two years. It’s hard to pick a favorite right now so we’ll just watch for news and deals.   BMY, GILD, MRK, LLY and VRTX are trading at the top of their 52 week range.  VRTX sold off 10 pts on Friday from its 52 week high, but the stock is recovering today in early trading. BIIB has made a huge run since 9/27 with the release of the Eisai data but the stock remains speculative and the stock is weak early today. BIIB is a neuroscience play. Pfizer is recovering from its 10/3 low of $42.32 but is still the worst performing large cap drug stock of. 2022.

We are on vacation next week but here are some things to look for in this week’s market action:

  • 11/29 United Health (UNH) holds an investor meeting. UNH is up 7% YTD and flat for the past 30 days.
  • Mirati Therapeutics (MRTX) soared 48% over 2 weeks on buyout speculation. A hung cancer therapy is being reviewed by the FDA with an expected decision by mid-December.
  • Moderna and Pfizer are developing mRNA technology for a universal flu vaccine. Booster market in flux.
  • China lockdown and protests have brought the COVID vaccine issue to the forefront. Presumably XI could access mRNA technology from Biotech or Moderna and those stocks are up today.


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