Biotech Bull Market is Intact but SMIDs Are Too Volatile…Update-1…Healthcare holds up during technology sell-off

Update-1 JY 24…Healthcare Stocks held up well during today’s technology sell-off. NASDAQ stocks took a big hit today with the QQQ down 3.59%.We can say it was caused by the Google earnings report as technology analysts tried to read beyond the actual numbers which were good. One question had to do with how much GOOGLE is investing in AI and when it will pay off as an ROI. Another issue is light advertising revenues  from YOU TUBE. Anyway it all seemed to bring about a focus on AI the raison d’etre for the 2024 bull market .

But healthcare and biotechnology stocks did well as defensive plays away from  the AI turmoil and speculation. Here are the ETFs we track and their performance today:

• Healthcare XLV up 0.83% near the $150 handle, UNH up 0.91% to $559.75.
• Biotech bull remains strong with the IBB up 0.21% to $145.65; most large caps held near current levels except high flying LLY down 2.1%.
• ABBV, JNJ, MRK, PFE showed strong gains and GILD our new buy was up 3.27%.
• Large cap Medtech showed gains: ABT, BDX, CAH, DHR, TMO etc.

7/25/24.update…The XBI was up almost 2% today , the IBB up 0.98%  one of the best performing  sectors of the day. Small cap ETFs IWM and IJR were also up over 1%/. With the ARKG up 2.85% we have trifecta of SMID biotech ETFS all up a bullish sign.

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SMID Biotechs May be Too Volatile for the Average Trader

• Bellwether funds remain bullish: PRHSX, FSMEX, JFNAX.
• Buy signal when XBI and IBB are techically strong but ARKG is still neutral.
• Best YTD picks as trades in my PA YTD are :ADPT,  CRMD, GERN, NVAX, TWST, VCEL. as of 7/25

It was another wild week for the market as it had to contend with a lot of news, beginning with a widespread system outage caused by a software issue with CrowdStrike Holdings. The S&P 500 ended the week at 5505 down 0.71% the first weekly drop since the end of June. The NAZDAQ 100 was hit harder down 0.93%.The Technology sector overall was down the most 5%, followed by a 2.9% in Communication Services and a 2.7% loss in Consumer Discretionary. Healthcare and biotech ETFs held up better with the XLV down 0.27%, IBB down 0.7% and the XBI down 1.47% after a nice run-up earlier in the week.

We still favor Large Cap Biopharmaceuticals for core healthcare portfolios and our top picks are : ABBV, LLY, MRK, REGN, and VRTX. And our new buys were PFE and RHHBY. Good value and low risk makes AZN and GILD look good as well. Other sectors of healthcare such as MedTech and Tools can be covered with our mutual fund picks PHRSX and FSMEX. We will review our picks after the next earnings round in the coming week.

SMID biotech stocks are specualtive and should be no more than 10% of a healthcare portfolio.

Our Biotech Trading Model for Small and Mid-Cap LifeScience Stocks

SMID biotechs are the focus of our innovation trade. These Life Science companies are the future big winners because of breakthrough therapies, drug discovery platforms , CAR-T and cellular therapy. SMIDs are also likely to be acquired by big pharma.. Among the breakthroughs in biotechnology have been in immuno-oncology for cancer, DNA sequencing, monoclonal antibodies for autoimmune disease and receptor agonists like GLP-! for obesity and diabetes  As we look over the next year we would expect novel therapies for neurodegenerative diseases like Alzheimer’s, Parkinson’s and rare diseases.

We are evolving a model based on stock momentum and technicals because it is difficult to track financials in a Company that is really in a clinical  development stage.. So we have pre-screened many of these companies for core technology, adequate capital and analyst coverage. Many are really at a venture capital stage.Here are some recent notes stocks in recent trading::

1. The performance of these individual stocks track the SMID ETFs : ARKG, IBB and XBI. If any of these ETFs are strong chances are high that most of these stocks will outperform.
2. Many of these stocks are still too volatile for long term holds so you either have to day trade them or hold through the volatility until the next milestone.
3. Over the past week several of these stocks were up 10-20% in one day, but they could not hold onto their gains.
4. The objective of this model is ultimately a portfolio that brings long term gains.
5. Smaller cap ETFs perked up last week portending good gains ahead with FED cuts.

SMID Cap Trading List

S=sold,4=gains,H=hold. Losers are nt removed from the list but new stocks are added.