SMID Biotech Stocks Were Cruising To New Highs Until Friday’s Speed Bump

SMID Biotechs at Mid-Year 2026- Big Gains, but a Loss in Momentum

• A bit of a Sell-Off on Friday and again on Monday may curb momentum traders, but the biotech bull market is intact over 3yrs beating the S&P 500.

• Small caps need to continue outperforming in Q3. Many outperforming SMID biotechs are included in Russell 2000 (IWM), up 19.22% YTD.

• Seasonality is a factor at the end of August and is usually weaker.

As we wait for Q2 earnings, most of the major Life Science ETFs and Funds we track are near the highs of the year. This is pretty much what we expected in our Biotech Model from January 2026. From previous years in bull markets, stocks would run up through mid-summer, then take a correction at the end of summer, get choppy through Q3 earnings, then resume the run till year -end. But we have done so well during H1; maybe it’s time to review and Rebalance before seasonality hits your portfolio. But here is the post we made last week: Innovation Drives Gains in Biotech Stocks.

Here is where we are in mid-year 2026:

• Major Life Science  ETFs: ARKG at $40.58, up 40% YTD; IBB at $189.55, up 12.3% YTD, 3yr 48.5%; XBI at $155.32, up 27.4% YTD, 3yr 85.7%.

• Healthcare ETFs by Sector: XLV at $161.41, up 6.61% YTD, IHI at $51.34, down 10.81% YTD, IHF at $57.33, up 19.92% YTD.

• S&P 500 at. $749.17 up 9.86% YTD, DOW Jones I at $524.47 up 9.13% YTD, NASDAQ-100 (QQQ) at $711.72 up 15.86%YTD, 3 yr 67.2%.

In January, after the JPMorgan Healthcare Conference, we posted an article: SMID Biotech Bullish Trends that should continue in an SMID cap, momentum-driven market.

Note the following big winners we hold from our Focused SMID biotech trading list on January 20. Many of the stocks did well even after a huge year in 2025. There were many other SMID biotechs that were 20%+ winners as well in our portfolios, but we sold them too soon to rebalance for TECH stocks,

Adaptive Biotechnology (ADPT) at $21, Mkt Cap $3.36B, Perf up 31.7% YTD. 3yr up 185%. e on 7/29.

Guardant Health (GH) at $158.40, Mkt Cap  $21B, Perf. up 55% YTD, 3 yr. up 307.8% YTD,

Natera (NTRA) at 272.89, Mkt Cap $39B, Perf YTD  up 19.12%, 3 yr.437%

Personalis (PSNL) at $15,  Mkt Cap $1.85B, Perf. up 88.94% YTD, 3 yr. up 586%.

Some of our newer picks have done well, like Amneal Pharmaceutical (AMRX) at $17, up 36% YTD, or, if valuations or volatility are an issue, have a look at GE Health Care Technologies (GEHC) at $65.31, down 20% YTD. Looking forward to value, we even bought a little BAXTER (BAX) at $20.

Will a week or two of selling be enough to take the froth out of the market? Not if we get a few deals in these genomics stocks. The big gains in TECHNOLOGY have come from the semiconductors that fuel the AI trade. The SOXX was off 4.77 % today, but is up 135% over one year, 235% after 2 yrs. Piling on the Korean chip megacap $1B IPO SK Hynix didn’t help, down 9.3%. Then add the trillion-dollar SpaceX (SPCX) IPO down % today, close to the offering price of $135, and you may conclude there isn’t enough money to go around. As one analyst commented about SPCX:  “This is the worst allocation of capital ever.” But we’ll see, as there is plenty of ink supporting these megatrends.

What are the alternatives for investing in biotech:

Fidelity Select Biotech (FBIOX) up 13.85% YTD, one year 49.71%.

Johnson and Johnson (JNJ) up 24.56% YTD, one year 65.3%,  3 yr. 61.24%. *This is the new JNJ after restructuring (many spin-offs)

AbbVie (ABBV) up 8.2% YTD, 29.17% 1 yr, 3 yr 81.8%.

Here is the SECTOR performance for the past week and YTD as provided by STATE STREET SPDR ETFs: with a trend as follows: Energy has been the leader due to the WAR with IRAN. InfoTECH has been the leader until the past two days, now negative over 5 days. Over the past month, Healthcare and Financial have been leaders. Even the weekly trends by sector have been volatile, with TECHNOLOGY coming back as leaders every 2 weeks. However, many strategists feel that the market is broadening and portfolios need to be more diversified. Look for more opportunities for better returns in healthcare because of sheer numbers -a huge TAM, diverse subsegments, and application of AI.