Choppy Markets Ahead for a Seasonally Weak September
- Biotech stocks remain in a bull market with strong fundamentals, M&A and technology trends but momentum has eased from summer highs.
- The 3 strongest sectors with recent momentum: energy, technology and healthcare.
- Nice winners today : Novartis (NVS) up 6.7%, Medtronic (MDT) beats raises up 2.41%. MedTech recovery underway.
As you review your portfolio you may be surprised by the losses in coming days however small. No don’t blame FED Chair Kevin Warsh for his sharp language on interest rates the narrative has not changed ,rates are likely to rise. And biotech stocks won’t run up forever despite all the breakthrough news in oncology with an FDA approval from Revolution Medicines for pancreatic cancer and new Phase 3 clinical data from Moderna and partner Merck for a potential cancer vaccine. The bull market for life science stocks has room to run if there is any money left after the Trillion dollar round of artificial intelligence IPOs from Anthropic and OpenAI get launched. And we just about digested the $75 billion dollar IPO of SpacEx (SPCX) holding strong just a tad above the offering price. One positive market trend we saw from this Summer is that when tech falters due to pushback from local residents on Data Centers or internet costly chaos from china hacks, some of the spare change from the “compute” market flowed into biotech stocks
But from where we are in 2026 combined with a good year in 2025 the industrial -medical complex is not short on capital as investors will buy into innovation and deal making so far looks good with M&A up this year. On a global level the geopolitical scene does not feel so great with capital and human destruction evaporating with the WAR in IRAQ and Ukraine; climate change being brought to mind with melting glaciers in Nepal and Tibet and massive Wildfires in the West. Then there are tariffs, record US Deficit, global bond yields up, immigration battles in the streets and a mid-term election coming up….STOP….too political ? Just saying things dont seem rosy eh?
Getting back to markets and my theme lately has been to catch the rhythm of the market by following the sectors and the current performance utilizing the State Street Sector Tracker with healthcare down for the week and Technology regaining a bit: Here is performance for several key sectors: as of AUG 28:
- Healthcare up 10.17% YTD, up 4.92% MTD.
- InfoTech up 29.54% YTD, up 6.36% MTD.
- Energy up 43% YTD, up 7.41% MTD.
- Materials up 16.19% YTD, up 4.48% MTD.
- Financials up 5.37YTD, Up 1.35% MTD.
- S&P 500 up 12.48% YTD, UP 2.68 % MTD.
And here are some trends we look for bullish news in the healthcare sector: continuation of M&A and licensing deals application of AI in drug discovery and hospital management, drug pricing and gov’t intervention-NOT. Two of our picks were up today Novartis up 5.4% on a Ph 3 MS trial and Medtronic (MDT) on a beat and raised guidance .Our favorite sector for healthcare has been SMID Biotechs as can be tracked by the XBI. Also we would be concerned if small caps deteriorated in here because many of the well known financed SMID Biotechs are holdings of the Russell 2000 (IWM) up 19.41% YTD, 0.945 MTD, at $293. But large cap biopharma looks good.
Here are levels of key indices and ETFs to track as we move through September:
(Prices are on Aug 9 are about 10% off the peak of summer values)
DOW 519.47, DIA Up 7.95% YTD 539.62 up 12.29% YTD
S&P 500 7411.98, SPY Up 8.36% YTD 773.26 Up 13.39% YTD
NASDAQ 24975.8 QQQ Up 11.38% YTD. 723. Up 17.7% YTD
XLV 162.57, Up 5.02% YTD. 165.68 up 7.03% YTD
IBB 188.14, Up 11.48% YTD 197.78 Up 17.1% YTD
ARKG 37.81, Up 30.51% YTD. 43.04 Up 48.57% YTD
XBI 150.63, Up 23.42% YTD 157.37 Up 20.07% YTD
XLE 59.62, Up 33.35% YTD. 57.50 Up 28.6% YTD
XLK 175.88 Up 22.16% YTD. 187.97. Up 30.56 % YTD
Some of the REBALANCING tactics you should consider to help buffer your portfolio against big losses:
- Write calls on big overweighted large cap positions.
- Check momentum of the stock (RSI) before making the trade.
- Take losses early in Q4.
- Adding gold and other metals to hedge against inflation risk.