Update-4…6/29….I’m back but I did not miss much in biotech trades, but a lot of “3 day wonders‘” you know stocks that get momentum then quickly fade. The XBI is still holding above the $90 support level with a range of $89.13 to $94.88 closing Friday at $92.71 so nimble traders could have netted a few bucks. Will continue to focus on SMID biotechs because that is the where the innovation lies and where the big boyz find their deals. Even the IBB is holding up at 137.26 up 2.37% for the month off a recent high $140.26.
The XLV is holding near its YTD highs at $145.75 up 6.87% YTD but trailing most other sectors. The QQQ at $479.11 is up 16.99% YTD and 4.23% for the month. The S&P 500 was up 16% YTD.
Review my previous posts on Large Caps and FUNDS and you’ll see the leaders and picks are doing well, especiaily LLY,REGN, VRTX with ABBV and MRK lagging a bit. MRK stock took a big 4*+% hit to $123.80 on huge volume over 100M sharesFriday but maybe because of FDA not approving a lung cancer drug It’s an ADC drug Antibody-Drug-Conjugate. .Need to check this out on MONDAY.
I will review the SMID Stocks on our trading list this weekend to find some Q2 winners but of course they are very volatile even for day traders, For me the following holds/trades made money: ADPT, GERN NVAX,NTRA,RNA (new), VCEL. The big loser trades over 6 months are obvious but I’ll mention a few: CYRX, QDEL, PACB-all momentum trades “on the way down”. These are among the worse stocks in biotech in many years.
I’ll come up with a new trading list tomorrow but let’s say that the small and mid biotechs are very difficult to trade but the objective remains to find long term winners. ii’s a large cap world!
REMEMBER the MEDICARE Drug Pricing legislation (IRA) looms ahead for some of the large cap biopharma stocks.
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Update-3 6/17…It’s all about technology stocks with XLK up 1.52%.. XBI at $90 handle, risk off for traders.
Vacation this week so limited updates.
Update-2 6/14 …2P EDT looks like a “risk-off” situation developing for SMID spec biotech with XBI off 2.3% at $91 handle. GILD up 3.2% among large caps.
Update-1. 2:45 p EDT, Biotech Stocks catch the bullish buzz with the XBI up 1.7% to the $94 handle, but off highs before FED. Our SMID Life Science trading list shows many nice winners as FED holds rates steady. 5.25-5.5% .Backdrop of upward moves in Apple, tech and semis supports sentiment. large caps mixed and off highs. Steady as she goes with some housing pick-up XHB up 4%. AAPL cruises to $219 before closing at $213 level. Breadth was off slightly.
Labor market in better balance.gradual cooling. Unemployment low at 4% level.
GUNDLACH:- a remarkably vague Q&A? a growing acceptance of a higher rates for longer. One cut left?
Inflation has been reduced substantially, and policy is restrictive.
- SMID cap check: IBB up 0.8%, QQQ up 1.39%, IJR up 2.31%, IWM up 2.24,
- Selected 2%++ winners: ABOS, ADPT, ARKG, EVH, PACB, ROIV, RXRX, SUPN, VCYT.
- CRSP up 7.4%,NTLA up 11%, PACB up 10+%..
- JNJ still stuck in talc trap.
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Healthcare and Biotech Investing: Breakthrough Drugs for Treatment of Cancer
- Healthcare stocks underperformed YTD because of weakness in UNH and strength in Technology and Communication Services.
- Large cap biopharmceuticals led healthcare stocks higher. See top picks.
- Other healthcare sectors lagged compared to previous peak years: devices, diagnostic and Medtech.
The XLV gained 1.90% for the week to $146.43 and is now up 7.37% YTD but it took a few “dipsy- doodles” to get here after hitting a couple lows around $137. Biotech stocks remain choppy with the IBB up only 0,64% YTD at $136.72 after hitting a FEDspeak day low of $124..27. SMID biotech stocks always need to raise money so are sensitive to rates which have help steady with FED policy on hold due to a robust economy and concern for inflation. Should the economy stall and momentum ease for AI stocks, healthcare could become a refuge so look for relative strength and compare to other sectors. Track sector performance here. Note that the rally broadened out recently as momentum from technology eased and financials, utilities and industrials did better YTD. The leader remains communication services (XLC).
Moreover investors and traders are focused on technology stocks which are up 12 % YTD with the XLK and 44.2% with the VanEck Semconductor ETF (SMH)! Should the market cool down healthcare stocks are likely to be less volatile and show more gains for the remainder of 2024. THE QQQ was up 2.72% for the week and 13.05% YTD.
Healthcare portfolios also took a hit from big providers like United Health (UNH) down 6.8% YTD, which was damaged by a major hack hurting earnings and stolen patient data. The IShares U.S Healthcare Providers ETF is flat YTD down 0.21%.
So for investors the safest healthcare play was the XLV or the large cap biopharma stocks which account for much of the gains in funds and ETFs. For active traders who have some knowledge of the healths sciences industry you can focus on the volatile XBI equal weight biotech ETF up 2.35% YTD. The XBI range in 2024 was a volatile $81.95 in April to $102.93 in late February! We have featured posts of SMID stock picks that move with the XBI based on a MOMENTUM strategy.
Large Cap Biopharmaceuticals after ASCO Bounce
There is no ETF that tracks the TOP Large Cap Biopharma stocks even though most healthcare funds and ETFs have an overweight because of earnings growth and dividends. We have published a financial review quarterly to track most of them and recommend several for a balanced portfolio. Taking into account some of the clinical data from oncology drugs from ASCO our top picks are : ABBV, LLY, MRK, REGN and VRTX. Our speculative pick has been Pfizer (PFE) which was down 0.28% WTD and down 9.73% YTD a disappointment but nonetheless has recovered from April lows of $25.27.
Some the major news and data from ASCO and other Meetings that helped boost specific stocks came from novel treatments such as immunotherapy, ADCs and potentially cancer vaccines:
Merck (MRK) has been one of our top picks up 19.86% YTD and 4.09% for the week. Merck is leader in developing next-generation cancer research with a pipeline of various approaches such as immunotherapy, antibody-drug conjugates and inhibiting or degrading proteins and genes involved in cancer pathways. Last week Merck and Moderna (MRNA) announced results from a Phase 2b study of a combination neoantigen mRNA therapy with Keytruda for high risk Stage III/IV Melanoma following complete resection.
Vertex continued its dominance of Cystic Fibrosis therapy and lung function with TRIKAFTA data from a European Meeting. VRTX was up 6.08% for WTD and 18.72% YTD. And do I need to tell you again that Regeneron and Lily are among our top picks both strong this week and leaders YTD.
Astra Zeneca (AZN) is a relatively new pick and presented data from CAR-T with advanced hepatocellular carcinoma and more data from TAGRISSO for unresectable STAGE III EGFR mutated lung cancer. Up 2.56% 5 days, 18.8% YTD.
And of course we wrote about excellent results from Pfizer earlier this week and its cancer drug LORBENA,and its promising drug candidates rom the SEAGEN acquisition. But the Company has older issues from from legacy products such as the Comirnaty mRNA vaccine, Eliquis blood thinner, PAXLOVID sales and Nurtec migraine treatments.so it may take a few more quarters to sort out the sales trajectory of their broad product portfolio. The stock remains a strong hold.
Diversified Health Science Funds.
We covered Life Science mutual funds in a previous post so here is a summary of current performance and any “ASCO Effect”None). Note that Janus was a leader YTD because they were overweight large cap biopharma like LLY, NOVO,MRK and AZN.
Fidelity Select Biotech Fund (FBIOX) up 1.03% per 4 weeks. up 4.77% (3.55)YTD. Peaked at $20 in late FEB at $20.05. Among top holdings: ABBV, AMGN , REGN,VRTX.
T.Rowe Price Health Sciences (PRHSX) 1.07 % past month, up 6.7% YTD. Peaked 8/21 $30.86.Among top holdings: LLY, UNH,ISRG,MRK.
Janus Henderson Global Life Science (JFNAX) up 2.84% per 4 weeks , up 9.35% YTD .Among top holdings : LLY,UNH, NVO,MRK.
We are developing a SMID Life Science strategy based on momentum and other criteria. Among winners YTD are: Geron (GERN), Immatics (IMTX), Natera (NTRA) and Novavax (NVAX).
The iShares U.S. Medical Devices ETF (IHI) is up 4.36% YTD at $56.33 but lost momentum after Q1 reporting.