Update-3 3/6/2..The XBI huffed and puffed but could not break out from $100 today so my call stands that speculating in SMID biotechs is risk off. The less volatile IBB held near the $138 level. I’ll update our trading list at the end of the week but for now here are the SMID biotechs that I stil hold that are in the money: CRBU, CYRX,GEHC, HOLX. Added DNLI, CPRX ,CRMD,VCEL.Does not include trading profits from re-balancing. Of course all of my large cap biopharmas are doing well.
3/7/24 Bought more PACB at bottom today.
MedTech looks better with IHI near new highs. Report coming this week.
The XLV is holding near 52 week highs at $146. Our contrarian play of 52 week laggard PFE was up over 4% to the $27 level, as the Company rebuilds its pipeline toward oncology.
Update-2 3/5/24,,,NASDAQ down 1.65%.More selling across the board as 2024 rally fades. With MOMENTUM easing we will stop trading SMID spec biotech stocks. The XBI dropped below $100 to the $99 level and the ARKG dropped over 3%.to $30. Even some our favorite large caps took a ~1% hit today: LLY, UNH, VRTX . Until the XBI Geta moving toward it break range above $100 dont take on more risk in speculative biotechs.
Update-1 MARCH 4……The NASDAQ sold off 0.41 % in last hour of trading, with the QQQ down 036%.to $444. Our current trading focus is the XBI which was off 0.82% to $100.70. The SMID biotech stocks we track as part of our Momentum trades were mainly in the red with a few winners: EVH, EXEL (new), HOLX. The choppy action over the past few days combined with the speculative action in bitcoin and chip stocks gives me caution. This is the problem with a momentum market as if the tape slows down you tend to your selling instincts. Large cap biopharma was also mixed with LLY roaring on up 1.36%, but ABBV, MRK, REGN and VRTX down. The XLV was flat at $146 but UNH was down 1.56% as expected from the hack at their ChangeHealthcare Unit.
MEDtech was stronger today with the IHI up 0.89% and many winners among the large caps: ABT, BSX, EW, HOLX, ISRG, and MDT.
Financials , Materials and Real Estate got bid up today.AAPL and GOOG sold off.
NVDA was up only 3.6% today.
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Healthcare Shares Lag As Investors Get More Bullish
- But SMID biotechs remain the play backed by low rates and deal making.
- Defensive posture în portfolios also have risk. e.g.(UNH).
- Volatility remains in a Momentum driven market.
Amidst a bullish sentiment that seems to have taken hold in 2024 from the huge moves AI and tech stocks, healthcare shares have lagged. Moreover if this trend continues expect a broadening out of the rally because the economy still looks strong. In our last post we offered 3 possible strategies for healthcare investors from a low res approach utilizing ETFs and FUNDs like the XLV to more aggressive trades with smaller cap Momentum stocks. In the meantime the core holding of every healthcare portfolio United Health (UNH) is down 3.45% for the month and 7.02% YTD despite meeting earnings expectations because of a major hack and an antitrust probe by the Justice Dept. Despite the XLV having 8% of UNH among its holdings it is up 2.91% for the month and 7.30% YTD. Obviously this could change in coming weeks.
The more speculative side of biotech is volatile but more bullish with the equal weighted XBI up 14.12% for the month and 13.17 YTD but expect volatility. The one year range for the XBI is the recent $103.52 high to the November low of $63.80. The larger cap weighted IBB Is up 2.17% for the month and 9.18 % for one year. So both ETFS look good for biotech off the November lows. You should also see this outperformance in Life Science Mutual Funds of we recently covered.
It’s going to be a wild day with chips in play again: AMD, NVDA.
ARKG losing steam quickly, down 2.43.% to $30.86.
SMID biotechs are down in early trading IBB, XBI flatish. Update at close.