Update-4 June 8 Sideways market with trading opportunities in Small cap biotechs.
With markets so choppy day to day and volatile within day it is hard to trade. But in my most recent trades I am more hopeful with this buying window. The bellwether remains XBI which at $73 is in the money for us. See are other new trades that are doing well today: AGEN, CCXI, MRNA, MRTX, TGTX. Loser trades are ILMN and QDEL.
Core beaten up holds are also rallying today: CRSP, CYRX, VCYT.
BTW energy plays rule so check your portfolio. You need at 10% weighting as portfolio ballast with energy stocks.
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Update-3 June 6 12:30P EDT...A barely positive session with a broad sell-off in biotech shares with the IBB down 1.5% to $114 level and the XBI down 3% to $69. It looks like a reverse ASCO effect? So overall it remains a risk-off situation, A few green stocks like MRNA , NVAX and QDEL. Large cap biopharmas holding up well with LLY up 2+% on diabetes drug potential. REGN continuing sell-off on buy-out of Sanofi stake in Libtayo oncology asset. Libtayo is a monoclonal antibody targeting checkpoint inhibitor PD-1 for certain patients with advanced cancers.
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Update-2 June 3 12N PDT Large Cap Tech stocks sell-off in reversal from yesterday. AAPL and TSLA hit hard. Energy stocks show gains. Some nibbling in small cap biotech after Bristol-Myers Squibb acquires Turning Point Therapeutics (TPTX) up 116% to $74 ,precision oncology Company for $4.1B. Non- small cell lung cancer product expected to launch in 2023.With ASCO up next week investors will be looking for the next deal.
- XBI up 2.81% to $70.70.
- Most large caps hold the flat line.
- Novavax issues flagged by FDA NVX down 21% to $44.
Update -1 11:351 EDT, Risk Off on macro headwinds, fear of FED. Energy stocks still running with XLE at $87. Healthcare, RE losers. No follow through on last week’s rally XLV down 1.73% to $129 handle, XBI down 2% to $67. Biopharma stocks taking a hit on concerns about legislative action again but no specific headline.
- ILMN down again on rival VC funding.
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Healthcare Shares Lag in Pivot to Growth
- Time to nibble on your favorite speculative biotech stocks.
- Trading in small caps will be volatile and good for traders.
- Large cap biopharma stocks are still good holds for the longer term.
A major sector shift in last week’s trading brought 8-9% gains in Consumer Discretionary, Energy and Infotech sector shares in a huge rally. Defensive healthcare stocks were left behind yet still gained 3.27% (XLV). United Health (UNH) gained 4.4% last week. The IBB was up 3.2% for the week. The importance of a diversified portfolio became apparent especially holding energy stocks.
Major stock indices ended a seven week losing streak with gains of 6+%. NASDAQ gained 6.9% fueling a big bounce in many speculative life science stocks. The equal weighted small cap biotech XBI gained 1% to $71 off midweek lows of $66 taking many of our followed high fliers up more than 7-10% on Friday. For example well known MO plays CRSP up 5.63%,CYRX was up 13.56%, PACB up 14%, VCYT was up 8.88%. Day traders are back! Even ARK Genomic Revolution (ARKG) was up 5.42% on Friday and 3% for the week. But volatility is high with no trend in small caps yet. But the IWM is up 6.57% for the week and 0.36% for one month so maybe a good time time to nibble on small caps.
We added a small new position in Quidel (QDEL) at $103. a former high flier about to merge with Ortho Clinical Diagnostics (OCDX) spun out of Ortho (JNJ) a year or so back. Quidel management will run the new Company a positive. Trading will be choppy as the market digests the deal. Hard to analyze merger but some big buck backers.
You might want to look. at Illumina (ILMN) in the $260 range as a new buy and a long term hold. It is a leader in genomics and a long term play for early cancer detection.
Evolent Health (EVOL) gained 3.45% last week and is in buying range under $30. The Price to Sales ratio is 2.63 and EPS and Sales growth is promising. We also added AstraZeneca (AZN) several days ago in low 60s now at $67.40.
We will need some follow through this week to confirm a small cap rally. I’d like to see the XBI sail through $75. ASCO is coming up June 3-7 so that should bring news and catalyze momentum for biotech stocks.
Long large cap biopharma, ILMN, QDEL, UNH and XBI.
| Model | ||||||||||
| PORTFOLIO | ||||||||||
| 2020 | 2020 | 2020 | 2021 | 2022 | ||||||
| Stock/ETF | Ticker | Price | Wgt | Price | Price | 1 year | Price | YTD | ||
| 10/25 | % | 12/31 | % Perf | 12/31/21 | % Perf | 5/28/22 | %Perf | |||
| iShares NAZ Bio | IBB | 136 | 25 | 151.5 | 25.7 | 152.62 | -20.74 | 119.5 | -21.7 | |
| iShares Russell 2k | IWM | 163 | 10 | 196.4 | 18.3 | 222.45 | -17.97 | 187.64 | -15.65 | |
| Merck* | MRK | 80 | 5 | 81.77 | -10 | 76.64 | 19.1 | 93.08 | 21.45 | |
| United Health | UNH | 330 | 15 | 350.7 | 27.19 | 502 | -20.4 | 507.11 | 1 | |
| SPDR S&P Bio | XBI | 117 | 5 | 140.8 | 48 | 111.96 | -44.2 | 71.09 | -36.5 | |
| Healthcare SPDR | XLV | 108 | 25 | 113.4 | 14.71 | 140.89 | 5.32 | 134 | -4.88 | |
| T.Rowe Hlth Sci | PRHSX | n/a | 5 | 99.65 | n/a | 104 | -15.17 | 87.88 | -15.56 | |
| iShares U.S MedT | IHI | 50 | 10 | 54.83 | 65.85 | -7.15 | 54.77 | -16.83 | ||
| Tracking Comp | COMP | |||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | -59 | 33.64 | -45.07 | ||||
| FIDO Biotech | FBIOX | 25.18 | 19.35 | -36.72 | 13.76 | -28.89 | ytd | |||
| FiIDO MEDtech | FSMEX | 76.15 | 83.18 | -19.62 | 61.66 | -25.87 | ytd | |||
| DOW | DIA | 310 | 363.3 | -4.76 | 332 | -8.6 | ||||
| S&P 500 | SPY | 379 | 475 | -1.84 | 415.26 | -12.57 | ||||
| NASDAQ-100 | QQQ | 315 | 397.85 | -6.71 | 309.25 | -22.31 | ||||
| Top Biopharmas | ||||||||||
| Abbvie | ABBV | 33.55 | 150 | 10.78 | ||||||
| Bristol Myers Sq | BMY | 18.94 | 76.14 | 22.12 | ||||||
| Eli Lilly | LLY | 62.39 | 323.48 | 17.11 | ||||||
| Merck | MRK | 28.49 | 93.08 | 21.45 | ||||||
| Regeneron | REGN | 39.86 | 692.8 | 9.7 | ||||||
| Vertex | VRTX | 33.55 | 273.73 | 24.65 | ||||||