Healthcare Portfolio Playbook On a Broad Rally Week…Update-1

Update-1 June 29 The Momentum indicators for biotech: ARKG was flat at $9310, XBI down 1.53% to $135.74. COVID Dx stocks were stronger ABT up 1.31% to $117.21, QDEL up 3.97% to $132.12. COVID Vaccine stocks CVAC, MRNA and NVAX were strong.

Our new mid-cap picks were weak: CRSP down 0.75% to $150.49, CYRX down 1.29% to $65.89, VCYT down 1.55% to $41.28.

Gene therapy stocks were red except EDIT and NTLA.

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Healthcare Portfolio Playbook On A Broad Rally Week

• Can bullish sentiment hold through July earnings?
• A. Diversified Healthcare Portfolio is working, add IHI.
• Small caps are gathering steam.

It was a great week ending 6/26 for healthcare stocks and a fantastic week for the market as the Dow and the NASDAQ moved to new highs. Despite talk that the FED is “behind the curve” with some officials on the “dot plot” calling for a more hawkish posture the market took off. The bullish sentiment was bolstered by anticipated good earnings in the coming weeks and more encouraging prospects for a bipartisan infrastructure legislation.

As concerns about the delta variant rise keep a watch on coronavirus stocks. Vaccine stocks (BNTX, MRNA) remain strong and COVID diagnostics could pick up.

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Note the big bets on passage of infrastructure legislation and “reopening trade” with these sector moves up: S&P500 Energy 6.66%, S&P 500 Industrials 3.04% and S&P 500 Materials up 2.1%. MidCaps and Small Caps were up over 4%. The annual Russell rebalancing ended on Friday so look for an impact on individual stocks on Monday.

Healthcare stocks rose over 2% or more depending on your weighting of smaller cap more speculative biotech with the XBI up 4.485. for the week and the ARKG up 2.95%. Our balanced Healthcare Portfolio Model has worked well since initiated October 25,2020 led by UNH, smaller caps and biopharma stocks.We will tweak the model by adding medical technology and devices with the iShares U.S Medical Equipment (IHI) which should benefit from the “reopening” with more medical procedures.

Comments:

1. New highs were hit for the DOW, NASDAQ and the XLV Healthcare ETF.
2. THE XBI was up 4.48% to $138 for the week but considerably below the February high of $174 We added ARKG as a trade at about $80.
3. The T.Rowe PriceHealth Sciences Fund offers good diversification beyond biopharma with overweight holdings in UNH, TMO and ISRG. Up 50% over one year.
4. Our 3 new Mid-cap picks show nice gains over one month:CRSP, CYRX, VCYT.