Update-1 11/18…Healthcare stocks had a good week with the XLV up almost 1% to $134 despite choppiness. We are still facing MACRO headwinds and the FED so stay cautious. There was good tape action in mid-cap biopharmas. Medtech is looking better with the IHI up 4% for the week but the sector is still best with supply chain and cost issues.
Here are weekly results:
- The IBB was flattish but the XBI took a 4% hit to the $81 level.
- UNH recovered on Friday to go up 1.54% to the $530 level.
- We added to Mirati (MRTX) up almost 5%. We bought Supernus (SUPN) at $34 level.
- We added to Evolent Health (EVH) at $27 level.
- One of our top picks Merck (MRK) hit new highs today at $104.24.
- Large caps did well with many near new highs. We will do a metrics report this weekend.
Healthcare Sector Update.
- Stay with Large Cap Biopharmas for growth and dividends. 52 week leaders are BMY, GILD, LLY, VRTX ;AMGN and BIIB are come-backs.
- Our top pick UNH is weakening on earnings and valuation.
- We are looking for a come-back in Medtech as represent by the iShares U.S. Medical Device (IHI) ETF.
Last week saw more volatility within the healthcare sectors so this is a good week for review and maybe rebalance. You can review our sector model below and compare it to your holdings. Another option is to just stick with major ETFS: XLV, IBB and XBI. But I am hearing on CNBC and reading that many strategists are favoring healthcare because of predictable growth. and defensive nature. But if the FED pauses and the risk of recession wanes you will see big moves like over the past month when investors rotate rapidly. For example over one month materials (XLB) up 18% , QQQ up 11%, semiconductors (SMH) up 30%!
Here is a quick review:
- Large Cap Biopharmaceuticals has been our primary focus and we have been overweight the majors: ABBV, BMY, MRK, REGN, VRTX. We will update these metrics at the end of the week.
- If you want just biotech then the iShares Biotechnology (IBB) can work if combined with the Healthcare Select SPDR (XLV). But UNH has been weak lately so the XLV is not recommended.
- Momentum traders may prefer the SPDR S&P Biotechnology (XBI) which is equal weight favoring smaller caps.
- Biotech stocks always need help from small caps strength like the IWM.
- For MEDtech we favor the IHI and the FSMEX.
- You can diversify further in “tools and diagnostics” with life science funds like the T.Rowe Price Health Sciences Fund (PRHSX).
|Stock/ETF||Ticker||Price||Wgt||Price||Price||1 year||YTD||30d||Price||5 days|
|10/25||%||12/31||% Perf||12/31/21||% Perf||%Perf||%Perf||11/12||% Perf|
|iShares NAZ Bio||IBB*||136||15||151.5||25.7||152.62||-23.91||-12||13.61||134.25||4.6|
|iShares Russell 2k||IWM||163||5||196.4||18.3||222.45||-24.24||-15.98||11.44||186.9||4.6|
|SPDR S&P Bio||XBI||117||10||140.8||48||111.96||-36.34||-24.29||8.29||84.76||6|
|T.Rowe Hlth Sci||PRHSX||n/a||5||99.65||n/a||104||-23.47||-12.21||8.63||91.37||4|
|iShares U.S MedT||IHI||50||5||54.83||65.85||-25.91||-21.21||8.83||51.89||5.81|
|Bristol Myers Sq||BMY||24.91||21.83||9.06||75.96||-3.58|