Biotech Bonanza – Approaching An Inflection Point

Over the past month, the focus of the lawmakers has been on the repeal of the Affordable Care Act or Obamacare and passage of a new healthcare bill, the American Health Care Act often dubbed as TrumpCare. Those efforts didn't go far enough the last time in April, but it still continues as work-in-progress. The Bill is being seen as a legislative hurdle that the new administration wishes to surmount before making further progress on its other priorities like tax reform and infrastructure spending.

In the absence of price-cutting rhetoric and tweets, the Biotech sector calmly consolidated over the month of April. In fact, as the Nasdaq (QQQ) made a new high last week and the S&P 500 (SPY) approached one, the Biotech indexes, represented by the Nasdaq Biotechnology Index (IBB) and the S&P Biotechnology Index (XBI), were within 5% of their 52-week highs. This is a favorable departure from similar instances in the past where the biotech indexes were treading water and struggling well below their 52-week highs, as the broader market climbed higher.

Prudent Biotech - IBB - Nasdaq Biotechnology Index

Prudent Biotech - Biotechnology ETF IBB tracking Nasdaq Biotech index