Biotech Playbook: Small Caps Show Momentum Peaking During #JPM24…Update-1

Update-3 1/19/24 2:45 EST …...XBI trying to bottom at $87 handle, but consider test providers in light of pick up in patient utilization of healthcare DHR ,TMO. NAZ up 1.5% on huge tech rally. AMD at all time high at $170.

Update-2 1/18/24,,,11:15 EST… Look out for potential sector shift as XLV is down 0.9% as tech shares rally with XLK up 1.65.% , UNH is down over 3% on higher costs.IHF down over 2% .

Update-1 1/17/24…Don’t fight the tape which is sleeping waiting for direction from earnings or dealmaking news.

• We raised some cash from funds and recent trades. ILMN.
• Stay with our favorite large caps:  ABBV,GILD, LLY,  MRK, REGN, VRTX.
• Small caps too volatile in downtrend: ARKG, XBI,IWM, even IJR.
• Added to MedTech: BSX,FSMEX.

Biotech Playbook-Small Cap Trades and #JPM24

• A cursory review of charts from our list of small cap trades and holdings from our list below show some peaking during #JPM24.
• Severe losses hit momentum stocks that could not deliver a new deal or good earnings news.
• The momentum of selected stocks was strong up until early January was encouraging but we need less volatility in period ahead to confirm a new bull market.
• There was a pick-up in M&A which bodes well for financing and the biotech market in general.

Over the past week we provided updates on the market during #JPM week. We developed the SMID cap list below with the expecatation of trading profits but more importantly long term appreciation. We will update the SMID list in about 2 weeks or after Q4 earnings. We reduced many of our SMID positions last week, but remain positive on selected small caps.

1. Genomics stocks were a focus for traders with some positive developments. Pacific Bioscience(PACB) is well known stock with high expectations but with no good news the stock is down 38% to $6.71  over the past 12mos. off a July high of $14.55. TWST and TXG were both positive trades. ILMN is a new holding.
2. CRSP, EVH, HOLX, IMTX, VCEL, VCYT still look good as long term holds. PRHSX is a long term hold.
3. ARKG,CERE, IJR and XBI were profitable long trades.
4. We had no position in CYTK and it was off last week as the rumored deal with Novartis is being questioned. This had a negative impact on the market.
5. MedTech stocks are recovering from lows.IHI.

Overall the biotech market looks more postive for 2024 wit dels picking up and interest rates stable or declining.

Disclosure LONG: ABOS,CPRX, CRBU,CRSP, CYRX, GERN, HOLX, IMTX, QDEL, SUPN, VCEL,VCYT.