Update-3 …7/11…SMID biotechs rally on a big rotation day out of MEGA Cap tech.XBI up 2.67% “kissing” the $98 level.Nibble on our Life Science trading list as it is another “green screen ” day. Even the IBB broke through $140 today up 2.36%.
SMID momentum stocks today: ABAX, ADPT, CPERX, NVAX , RNA, TEM (new), TXG, TWST, PACB, VCEL,VCYT, etc.
XBI chart IBB Chart
Update-2.. 7/10…Market hits new record after POWELL testimony. FEDspeak sees rate cut imminent? XBI breaks thru $95 headed to $100 as flush momentum traders seek new sectors. Green screen- continued strength in CRNX, CRMD, DNLI, NTRA, NTLA, RNA, SUPN, even IBB up over 1%. And despite bad News on PBMs UNH is up 1.79%. ARKG lagging.
Update-1 7/9 …XBI was up 1.24% to $94.39 today pushing toward $95 in the money for my trade. Needs to break thru and stay for a few days for an uptrend. Many SMIDs are up today: CRNX, CRP, IMTX, RNA, SUPN, TWST. Even IBB has traction!
Added Tempus AI (TEM) to trading list at $35.32, Market Cap of $5.87B..An AI play on data mining. Tiny position.
Healthcare Stocks Continue to Lag the Market
- Healthcare stocks continue to lag the market up about 6% YTD, helped by Large Cap Biopharma but hurt by United Health.
- It was a difficult year not only for Healthcare Providers (IHF) down 2% but also substandard for MedTech (IHI) up only 3.43%.
- SMID Life Science stocks are usually the focus of growth and innovation but now investors favor large caps. M&A to pick up?
You don’t have to be a market guru to know which stocks are leading the market higher. what you may not know is that the top five stocks account for about 55% of the total return in the S&P 500 in 2024. You know one of them, NVDA, but you could still do well by holding a few of the other top performers like AAPL, AMZN, META and of course MSFT one of the original technology heavies from the last era 2001 bull market. But miss just one biopharma stock,Eli Liily and Co. (LLY) and your healthcare portfolio was a big loser because LLY is up 56.89% YTD and 96.39% over one year. Of course you could still do well with healthcare if you owned other top performing large caps like ABBV, MRK,REGN and VRTX that have done well over the past five years due to blockbuster drugs. But since the last biotech bubble of 2020-21 most other life science funds and ETFs have underperformed. And to make matters worse the ballast for many healthcare portfolios has been the providers mainly United Health (UNH) down 7.31 % YTD.
SECTOR PERFORMANCE-Q2 Earnings will be Key
Healthcare stocks comprise only about 12% of the S&P 500 while Technology is 33% of the S&P 500, which is up over 16% YTD. The leading SECTOR SPDR ETFs YTD are: Technology, Communication Services and Utilities. Healthcare is near the bottom up only about 6% YTD. Some market strategists believe that if technology stocks falter or trend down then energy and healthcare sectors will be favored.
One can view general economic trends through sector performance and healthcare was a defensive sector relatively safe from volatility. But with the explosive data demands of AI semiiconductors and computers are entering a new generation of growth. This has also propelled social media stocks like META to unimaginable heights and valuations. In a digital world data becomes currency and ever more powerful chips provide the intelligence.
LookIng Forward to Future Breakthroughs?
So what can AI do for healthcare? For starters there are terabytes of data within the healthcare system that can be analyzed to reduce costs and improve treatments. We have also read about the potential of using AI for drug discovery to improve molecular targeting antibodies and protein folding. Breakthroughs in cancer treatment have come from immuno-oncology drugs and immunotherapy The class of molecules used in obesity drugs, Semaglutides or GLP-1 receptor agonists did not exist 7 years ago so who knows what blockbusters are coming next? Gene therapy has approved products and cellular therapy is gaining patients. Another huge disease opportunity is neurodegenerative disease such as Alzheimers and Parkinsons and there are currently drugs in late stages clinical development?. And infectious diseases always present a pandemic risk as we saw just a few years ago.
On the negative side the IRA (Inflation Reduction Act) proposes to reduce healthcare costs by penalizing companies with high drug prices .Penalties have been suggested such as restrictions on patents. There are many challenges and opportunities with this law as well as political unrest should Republicans gain more power. Look for an impact on selected companies in Q4 2024.
Portfolio notes: ADDED GILD, PFE long is now in the money. Trading XBI for an SMID rally.
| Model | |||||||||||||
| PORTFOLIO | * | ||||||||||||
| 2020 | 2020 | 2020 | 2021 | 2022 | 2023 | 2024 | 5 yr % | ||||||
| Stock/ETF | Ticker | Price | Wgt | Price | Price | Price | Price | P | Tot Ret | ||||
| 10/25 | % | 12/31 | % Perf | 12/31/21 | 12/31/22 | 11/11 | 6/7 | %Perf | % | ||||
| P | YTD | ||||||||||||
| iShares NAZ Bio | IBB | 136 | 10 | 151.5 | 25.7 | 152.62 | 130.55 | 115.53 | 136.2 | 0.35 | 24.7 | ||
| iShares Russell 2k | IWM | 163 | 10 | 196.4 | 18.3 | 222.45 | 174.36 | 175 | 200.87 | 0.61 | 28.2 | ||
| Merck* | MRK | 80 | 10 | 81.77 | -10 | 76.64 | 115 | 101.39 | 126.45 | 15.99 | 54.81 | ||
| United Health | UNH | 330 | 15 | 350.7 | 27.19 | 502 | 530.27 | 541.21 | 488.01 | -7.31 | 97.58 | ||
| SPDR S&P Bio | XBI | 117 | 10 | 140.8 | 48 | 111.96 | 83 | 66.95 | 91.71 | 2.71 | 5.16 | ||
| Healthcare SPDR | XLV | 108 | 25 | 113.4 | 14.71 | 140.89 | 135.88 | 126.27 | 144.41 | 5.89 | 54.04 | ||
| T.Rowe Hlth Sci | PRHSX | n/a | 5 | 99.65 | n/a | 104 | 89 | 83.41 | 94.27 | 7.95 | 19.33 | ||
| iShares U.S MedT | IHI | 50 | 10 | 54.83 | 65.85 | 52.57 | 45.75 | 55.82 | 3.43 | 37.63 | |||
| MedTech* | ABT | 5 | 123.5 | 127.46 | 109.83 | 94 | 104.02 | -5.5 | 21.77 | ||||
| Diversfied MED | JNJ | new | 146.48 | -6.55 | 4.2 | ||||||||
| Tracking Comp | |||||||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | 28.23 | 24.1 | 23.24 | -12.34 | -32.42 | |||||
| Direx3X Bull | LABU | 7.66 | 2.74 | 109.68 | -10.08 | -88 | |||||||
| FIDO Biotech | FBIOX | ** | 25.18 | 19.35 | 16.04 | 14.39 | 19.28 | -8.13 | -5.07 | ||||
| FiDO MEDtech | FSMEX | 76.15 | 83.18 | 60.04 | 51.64 | 62.11 | -0.24 | 9.33 | |||||
| JanusHendLifeSc | JNGLX | 75.91 | 9.81 | 28.9 | |||||||||
| DOW | DIA | 310 | 363.32 | 331.34 | 343 | 393.7 | 4.47 | 46.21 | |||||
| S&P 500 | SPY | 379 | 475 | 382.41 | 440 | 554 | 16.69 | 85.83 | |||||
| NASDAQ-100 | QQQ | 315 | 397.85 | 266.33 | 378.39 | 496.16 | 21.16 | 159.7 | |||||
| Technology SPDR | XLK | 128.93 | 161.97 | 124.44 | 179.52 | 232.88 | 20.99 | 191.28 | |||||
| Top Biopharmas | * | e | 2022 | 11/11 | 6/7/24 | %YTD | 5 yr % total | 1 mo. | trend | ||||
| Abbvie | ABBV | * | 161.64 | 138.59 | 167.24 | 7.92 | 129.14 | 1.09 | – | ||||
| Amgen | AMGN | 310.88 | 7.94 | 67.19 | 1.14 | – | |||||||
| Astra Zeneca | AZN | * | 68 | 63.17 | 77.34 | 14.83 | 88.91 | -3.71 | d | ||||
| Bristol Myers Sq | BMY | * | 71.05 | 50.61 | 39.66 | -22.71 | -2.27 | -13.58 | d | ||||
| Gilead Sci | GILD | * | 85.39 | 75.92 | 66.69 | -17.68 | -2.68 | 4.4 | – | ||||
| Eli Lilly | LLY | 447.71 | 597.71 | 914.57 | 6.89 | 710.65 | 9.96 | u | |||||
| Merck | MRK | 110.95 | 101.39 | 125.45 | 15.99 | 54.81 | -2.31 | – | |||||
| Pfizer | PFE | 51.24 | 29.48 | 28.05 | -2.57 | -32.69 | -5.08 | – | |||||
| Regeneron | REGN | 725 | 798.94 | 1034.23 | -17.75 | 236.88 | 2.82 | u | |||||
| Vertex | VRTX | 288.78 | 373.65 | 474.57 | 16.63 | 166.1 | -1.76 | – | |||||