Update 1/14 After close: Biopharmas on the weak side from drug pricing politics.
- Both parties focused on pharmaceutical drug prices.
- IBB at $107.17 down 1.69% ; XBI at $80.12 down 2.29%.
- Red screen for Mid-Caps; BLUE BPMC NKTR all up a tad.
Update 1/13 10:30P Sunday- With Futures Weak and Momentum Waning
- XBI at resistance $81.98 , off Dec 24 bottom of $65.42.
- Same pattern for Russell 2000 (IWM) at $143.68.
Update 12:05p EST
XBI still moving up 0.68% at $81.37; bought Amarin (AMRN) this am near $16 based on yesterday’s presentation. Will follow-up. Still plenty of green in biopharma.
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Healthcare Stocks Rally During J.P.Morgan Conference
- Macro Fears subside-China, Dysfunction in D.C., Weakness in Global Economy
- Large Cap Biopharma M&A Provide Catalyst
- Healthcare stocks can provide growth and value despite pricing concerns
We are emboldened by the strong tape and technicals of all healthcare stocks during the J.P.Morgan Healthcare Conference this week. Nevertheless we are aware of the risks of late cycle investing in a volatile market ahead of 2018 earnings with macro events always rattling sentiment. But if you began trading last Friday you could have achieved ~10% gains with selected ETFs and much more with soaring mid-cap biopharma stocks off the December 2018 bottom. The MedTech sector also looks good for 2019 because of a forecasted 5% top line growth, new technologies for orthopedics etc., M&A and more stable earnings.. Moreover the FDA is committed to expedited approvals. Analysts at J.P.Morgan think that MedTech could weather a weaker economy better than other sectors.We bought BAX recently and have owned BDX and Fidelity Select Medical Technology and Devices (FSMEX) long-term.So be diversified among healthcare stocks.
The key to trading and investing after the Q4 meltdown is to follow the technicals because fundamentals are a bit unhinged and not tracking in this new age of volatility and macro shocks.And it remains to be seen if this “bargain hunting” rally can hold after 2018 earnings.
Here is 5-day performance (as of 1/9/19) for selected sectors:
XBI up 12.9%…SPDR S&P Biotech… Top Holdings ABBV FGEN HRTX MOGL IONS
IHI up 4 %…iShares US Medical Devices…Top Holdings ABT, MDT, TMO, DHR, BDX
IBB up 10.3% …iShares NASDAQ Biotechnology…Top Holdings AMGM BIIB GILD CELG ILMN
We have rebalanced our portfolios and overweighted healthcare stocks taking advantage of the year-end correction that devastated many healthcare stocks especially smaller caps. We added XBI as a trade and a few mid-cap biopharma as well as MedTech positions. Keep in mind that the best way to get big returns is to be patient and invest for the long term while following technology trends as we have seen with our former picks Foundation Medicine (FMI), Illumina (ILMN)
This week we added two new stocks GNMK at mid $5 range and TDOC at high $40s so both have run up a bit. We will continue to follow these stocks and update on news.
Disclosure long BAX GNMK TDOC XBI and several large and small cap biopharmas.
Genmark (GNMK) a molecular diagnostics platform Company with eSensor technology for respiratory diseases and identification of pathogens in blood culture with an expanded ePlex menu in development.
Teladoc Health (TDOC) proves telehealth services Worldwide by WEB or Mobile app covering 450 medical specialties including respiratory infections cancer and cardiovascular.
