Update-4 The market continued in its sell-off to the Fifth Week as the WAR in Iran pervades all thinking.If crude is up then stocks will be down. The latest timeline for the War with Iran for any sort of clarity of outcome is around six weeks.In the meantime that period can generate a lot of uncertainty. Analysts are more worried about crude at $100 and its impact on the global economy with rising inflation. GEOPOLITICS has taken over the market sentiment.
Update-3 Some Biotech rallies for second day this week as tech stocks lose momentum; SPY down 1.74% at 6477, QQQ down 2.39% at $573.79 , XBI flat at $123.90,, IBB down 0.49% at $165.26, .SMID biotech movers: AXSM up 1.54% at $164.27, CBIO up 14.6% at $13.50,CYTK p 1.74% at $63.48, DNTH up 3.57% at $82.45,GH up 1.76% at $88.10, NBIX up 0.98% at $132.40, SUPN up 1.47% at $50.80. But most biotech stocks were up much more til midday in a volatile session. PPH a biotech ETF recovered AH up 0.86% to $102.84. But large caps did better: ABBV, BMY and PFE.
We need to have the IWM rally to get generals to buy into biotech. The IWM was down 1.74%.
KODIAK Sciences (KOD) was up 74% on diabetic retinopathy trial reboot.
Update-2 Green screen day in SMID biotech stocks so buliish model is intact: led by XBI up 3.67%, IBB up about 2.5% even ARKG up 0.92%. Most of the SMIDs on our trading list were up. Rally helped by Merck buying TERNs for almost $7B to boost cancer portfolio.Terns’ lead candidate TERN-701 is an investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor currently in Phase 1/2 development for certain patients with CML
Update-1 I’ve added a few charts to put the sectors in better focus. Two major factors need to be considered in future analysis of the diverse healthcare sector: 1- Utiliization and surgeries and how it may be impacted by Medicare insurance. We have not seen any concrete data on how AI and cloud technology could impact healthcare but there should be a near term improvement in productivity and there are companies who are utilizing AI in drug discovery.
Health Sector Review: Cutbacks by Government are Beginning to Hurt
- The healthcare sector XLV had a series of multiple tops at the $160 level from NOVEMBER ’25 through early March and is now at $145.74 a four month low down 5.85 % YTD .
- In contrast the XLE bottomed on DECEMBER 31 at about $44 and has climbed to the $60 level with a brief choppy few days in early March at $56 up 33.75% YTD.
- The biggest disappointment for 2026 is the weakness in MEDTech and Health Science stocks and we’ll need to provide more analysis but for starters let’s say for MEDTech and US Medical Devices it is cybersecurity and tariffs; for Health Science some of the former issues but the assault on University Research by the Administration has been a major factor.
By now most investors know with the War raging with IRAN you should have re-balanced your portfolio with an overweight in ENERGY which in 2025 was about 3% of the S&P 500. Over the past 5 DAYS here is how the sectors performed:with the S&P down 2.42%.
Here is performance by sector for the past week ending: 3/21/26; Financials (XLF) turned green up 0.39%. Some market strategist have maintained that the S&P 500 (SPY) may no longe represent the “market” not only because of the WAR and weighting of energy but the impact of AI.
LEADERS: ENERGY up 2.54%,UTILITIES up 1.21%.
LAGGARDS; Healthcare down 3.74%, Consumer DIscretionary down 3.24%, Comm Services down 2.85%.
The surprise to you may be that healthcare underperformed as it was supposed to be defensive.The XLV is down 4.95% YTD and 6.68% for the month. In a previous s post on LINKED In I learned from my own trading and holdings that the MEDtech and Health Science sectors for the past several months underperforming.among Healthcare stocks. The IHF offered no help down 11.34% YTD , down 7.5% over one month.
We last did a Review of Healthcare Sectors on January 29 and here are some comparisons:
First paragraph is from 1/29/26-bullet below is the update:
MedTech: Is having a disappointing year with my Top 3 Holdings YTD and One year: ABT at $106 down 15.3% YTD, down 17% one year; ISRG at $107.5 down 10.4% YTD down 11.38% one year, BDX at $201 up 3.6% YTD down 18.5% one year. The IHI is is down 12.78% YTD and down 8. 8% over one year.JNJ at $227 should be considered a hybrid MedTech/biopharma and it is a major outperformer up over 50% over one year. 1/29/26
- The Fidelity Select Medical Technology and Device Fund (FSMEX) P $51.70, shows the magnitude of the Health Science and MedTech sectors: Down 14.5% YTD and down 16.38% over one year. TOP holdings include: BSX, DHR, TMO, ISRG, and EW. At one time in 2025 TMO was one of our top healthcare positions and now it is down 18% YTD!. The high was $643 on 1/28/26, now at $476.
- The IHI peaked at $64 in early January just before JPM Healthcare Conference. JNJ is at $237 slightly higher.
Biopharmaceuticals: The IBB at $174.25 is up 3.25% YTD and 26.7% over one year; the equal weighted more volatile XBI is at $126.73 and is up 3.94% YTD and 36.9% over one year. FBIOX is up 34% over one year. SMID movers to watch from our trading list: ABOS, AXSM, BBIO, DNTH. 1/29/26
- As of 3/20/26 the IBB at $163 s down 3.54% YTD and up 22% over one year; the XBI at $123.32 is down 0.5% YTD and up 40% over one year.
- The Top BIOTCH FUND (FBIOX) P 24.77, is down 1.43% YTD and up 27% over one year.
- The SMID biotech sector should be the focus for traders as can be seen by the performance of the XBI. There are some big winners for Q1 ’26 DNTH 87%, ROIV up 26%, SLDB 26%
Strategy for Investing: A few large cap picks with FBIOX and IBB as base combined with trading SMID cap biotech stocks.
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