Coronavirus Stocks: Take a Breather - The Easy Trades Have Been Done

NASDAQ Record Close to 10,617 up 0.66%, XBI down 1%. Don’t fight the tape?

• Gilead Sciences (GILD) remdesivir results allay some fears of virus with reduction of COVID-19 death risk but more data is needed; major study results coming in August.
• BioNTech (BNTX) up 7.4% on optimist timeline of mRNA vaccine for Q4 filing.
• Vir Biotechnology (VIR) up 3.2% to $48.71 after closing public offering for $345M.
• US Cases Rise led by California.
• Biotech Bull Market is Intact but Look to Rebalancing and Raising Cash
• COVID Risks are Rising and Economic Recovery is Pushed Out
• Work at Home Theme Boosts New Software and Telemedicine Access
• July 9.  DOW 25,706 S&P 3152  NASDAQ 10547

The coronavirus trade is not over because COVID Cases are spiking and the scientific news buffets stocks every day. The gains since mid-March are huge so that adding to existing positions in your portfolio will become more difficult. Moreover, trends with individual coronavirus stocks will take longer to assess until we get a few months of earnings and clinical data for major vaccine programs. But we are still in a bull market in biotech which we called last fall and early in the pandemic. Investors and even small traders are flush with cash and have a risk appetite for growth and technology. Rotation out of biotech and tech are unlikely. Retail, energy, and industrial stocks are stuck in a weak economy. Note that the bull market in technology stocks has rivaled that of biotechs with the XLK up 18% YTD. With a potential second lockdown from COVID in spiking regions, economic recovery has been pushed out.

Momentum traders have big winners on a daily basis. I have made huge gains on weekly trades on small speculative stocks with the news. Its a bit frothy!

(Click on image to enlarge)

(Click on image to enlarge)

As of July 9 YTD here is where we are on life science stocks in general and the fight against the coronavirus pandemic:

Selected Core Holdings: GILD up 15% YTD, GNMK up 288.6% YTD,  TDOC up 173% YTD.

Major biotech ETFs:  IBB up 16.65% at $140.65.  XBI up 22% YTD at $116.1, XLV flat at $100.95.

Core Mutual Fund Holdings:  FBIOX up 11.4% at $24.61, PRHSX up 10% at $89.54. Two large cap growth companies focused on life science tools and diagnostics are Danaher (DHR) and Thermo Fisher (TMO).

Coronavirus stocks at or near new 52 week highs: GNMK, HOLX​, NVAX, QDEL, TDOC.

Antibody therapy leaders: GILD, REGN, VIR (emerging).

Large cap leaders: ABBV, AMGN, REGN, RHHBY, VRTX.

Individual stocks will become harder to pick and more volatile with clinical data news and a summer doldrums after the upcoming earnings. Traders can still do well with all the volatility. Let’s see how life science stocks perform after a major 10 % correction usually in late August and through September.

Here are some points it considers if you choose to raise cash or re-balance your life science portfolio.

1. It has become widely accepted that a coronavirus vaccine will be needed in the long run to fight the virus until herd immunity evolves. The COVID vaccine trades were the easiest early and established current small cap leaders: BNTX, INO, MRNA, NVAX.
2. Many diagnostic companies’ stocks have soared on an expectation of high growth for COVID testing. However, we are at an early stage for assessing market share and product performance of all platforms; PCR/molecular, antibody, and now antigen tests.
3. Several companies are working on potential breakthroughs for antibody therapies. By early Q4 we should learn more about the clinical efficacy of antibody therapy undergo ing clinical trials. Look for news from Gilead Sciences and Regeneron and emerging companies such as Vir Biotechnology.