Biotech Stocks Lag Today’s Rally: S&P 500 Erases February Losses But Still Down 4.4% YTD

Broad Market Rally With Biotech Lagging

Biotech stocks showed some strength today with a lively tape but lagged the broader market. The S&P 500 (SPY) continued a rally that began on 2/11 and is now up 2.26% over one month, 4.39% over five days, erasing losses for February. Many of the financial and market pundits are very skeptical of this rally saying it is going nowhere but it already has gone somewhere, escaping the grim technical levels hit on 2/11 and correction territory. The bears believe it is a short covering rally. The S&P has pretty much traded with crude and energy stocks, a correlation that is very pronounced over the past month. A Barron’s cover article, “This Storm Will Pass”, offered support to the bulls with the subhead, “With no recession in sight, stocks could rebound to earlier highs”.

In today’s trading the healthcare sector lagged all other sectors with leaders: basic materials up 2.99%, energy up 2.77% and cyclical consumer goods up 1.76%. The XLV healthcare ETF was up 1.4%. The QQQ down 7.67% YTD is outperforming the IBXLVB and has some large cap biotech holdings.

The large cap dominant ETF the IBB gained only 0.68% at $263 just 15 points above the 2/11 2016 bottom and still down 22% YTD. Some large cap biopharma stocks outperformed: Gilead Sciences (GILD) up 1.9%, Celgene (CELG) up 1.92% and Abbvie (ABBV) up 1.84%. Amgen (AMGN) was down 1% on late stage clinical trial news for its osteoporosis drug but apparently not as good as Radius Health (RDUS) data which was up 25%.

The smaller cap XBI did better up 1.08% with a lot of big movers despite choppy action: ANAC up 2.72%, BLUE up 2.13%, and NLNK up 2.73%. The XBI is down 27.8% YTD.

We are looking for traction among the mid-cap biopharma stocks which were the momentum leaders before the August 2015 sell-off: Alnylam Pharmaceticals (ALNY), Incyte Pharmaceuticals (INCY) and Vertex pharmaceuticals (VRTX). Incyte (INCY) was $130 at the summer peak and is trying to form a base near $70 now.