Biotech Bull Market Opportunities: Away From The Madding Crowd Of Compute?

• Both of the major biotech ETFS are outperforming Tech and the S&P 500: BB up 25%, XBI up 29% YTD.

• Innovation and M&A underlying foundation for market support.Genomics theme: ARKG up 84%.

• Healthcare services are in greater demand, and technological advances can provide better diagnostics.

Healthcare stocks are starting to emerge as a good sector for trading and new core holdings. There are many new trading opportunities not only for SMID biotechs but also in health science stocks. Among the SMID health science stocks that we added over the past quarter are: Agilent (A), Thermo Fisher (TMO), and Waters (WAT). All are trending higher and contribute to performance in the XLV. Although the weighting of these health technology stocks is small compared to large-cap biopharma and healthcare providers like UNH, they can provide better diagnostics for better patient care. There is one fund that represents this sector well, and that is the Fidelity Health Science and Medical Technology Fund (FSMEX), up 1% YTD, weighed down by TMO, DHR, and other MedTech stocks, with the IHI down 16.98% YTD. The T.Rowe Price Health Science Fund (PRHSX) fared much better, up 13.61% YTD, because of positions in large-cap biopharma: LLY, JNJ, ABBV, and MRK.

But the big story, if you have been reading Raygent.com, and outsized performance, which began in June around the time of ASCO, has been with genomics stocks that offer tools and diagnostics for Precision Oncology. Our top pick has been Illumina (ILMN), up 105% and up 20% MTD, a leader in the genomics age. Have a look at the performance of Ark Genomics Revolution (ARKG), up 84% YTD!

Top Sectors of the 2026 Market: Technology, Energy and Healthcare

Here is the sector update as of 9/27 for StateStreet ETFs, starting with Healthcare XLV up 9% YTD. We said in an earlier post that if you focused on technology, energy, and healthcare sectors in your equity portfolio, you would do well. Energy is normally only about a 5% weighting, but because of the WARs in IRAN and Ukraine, they have been volatile but outsized performers. Here is the performance of State Street ETFs for YTD as of 9/25: ENERGY up 39%, Information Technology up 36%, and Healthcare up 10%. Other sectors in the green are Materials up 9.87, Industrials up 9.87%, Staples up 5.64%, and Real Estate up 3%. The S&P 500 is up only 13% YTD, but the Nasdaq -100 (QQQ) is up 21%.  One ETF that has a qual-weight model, Invesco S&P(500) RSP, underperformed the SPY, up only 10.21% YTD. This indicates that the general market has not been broadening out but remains concentrated in technology and energy stocks. But the sentiment for healthcare and biotech stocks is steadily improving.

We’ve heard bullish talk among the financial media types lately, and this week’s Barron’s features the biotech bull market with Innovation and M&A drivers and picks from a slew of analysts. I urge all of you to pick up the annual subscription to this excellent magazine; it will also get you timely email updates. We have reviewed some of the current biotech picks mentioned, and here are timely comments:

1. Revolution Medicines(RVMD)-Definitely should be a core position, but we missed it, and with a $4OB market cap may be too big for M&A.

2. Cardiology: we are also long BMY and NVS. ABBV is our largest position among large-cap biopharmas.

3. We have no position in MRNA.

4. We traded Scribe Therapeutics (SCTX) portably and will look at the stock again. We are long LLY.

5. BridgeBio (BBIO) has been on our focus list since late 2025.

6.  Vertex (VRTX) has been a long-term core holding for a long time.

7. We recently bought Biogen (BIIB) and posted last week.

8. We will have to look at Immunome(IMNM).

9. Protagonist Therapeutics (PTGX) has been on our focus list, but we sold too soon. I must have gotten too immersed in AI and chip stocks to let this one go.

10. There are many other good SMID biotech ideas in the Barron’s article..

“A year from now, we may be talking about pricing more. The Trump administration is aligned with the industry this year, and President Donald Trump was pleased with the temporary agreements the industry signed [regarding pricing]. But I don’t think the biopharma industry is out of the woods when it comes to critiques about US drug industry pricing.”…….David Risinger from Barron’s article.

Healthcare and biotech stocks offer diverse opportunities for traders and long-term investors. Today, for example  another SMID biotech stock, Kodiak Sciences (KOD) soared 177% on results from a Phase 3 study for wet AMD.