Image source: Pixabay

We were on vacation over the past week, and that combined with all the news from the Capitol and the worsening pandemic makes it a challenging week to look back on. Nonetheless, stocks are booming and many financial writers and analysts feel there is room for optimism.

We are in the midst of a sector rotation, so I’ve been spending more time and money on areas outside of healthcare while keeping my core biotech stocks intact. Lets me start by giving a brief summary of the market and our model healthcare portfolio. Amidst the turmoil of the past week we have a market that finds a way to renew itself with the most optimistic scenarios.

The DOW was up 1.61%, the S&P was up 1.83%, and the NASDAQ was up 2.43%. Energy stocks were up over 9% this past week and financials rose 2.4%, thus demonstrating the trend toward portfolio rotation or “re-opening’ trade. Bank earnings are slated for next week.

Most ETFs in Healthcare and Biotechs are At or Near One-Year Highs

Despite the J.P.Morgan (JPM) Healthcare Conference in a virtual mode this week, we will still get earnings updates, deals, guidance, and clinical news, so the next two weeks should be very active for traders. Here is a brief summary of our calls and trades over the past year.

Although we have made money in COVID-19 vaccine trades on the long and short side with AZN, BNTX, NVAX, and MRNA, we generally avoided taking any substantial positions and missed the trade in MRNA.

We maintained a core position in several large-cap biopharmas and reiterated buys: ABBV, BMY, RHHBY, MRK, and the IBB. However, we missed the big move in ALXN and are still waiting for GILD to perk up. We covered biotech and healthcare ETFs extensively and how to play them.

Small-Caps Were Big Winners With the IWM Up 70% to $208

The Russell 2000 and other small cap indices and ETFs have a lot of biotech positions. Over the past week, it was up 5.91%. Small-cap life science stocks took off in Q4, and we made several great calls and good trades. We urged investors to get into gene therapy stocks, and had one huge winner that we covered from the JPM Conference last year: Editas Medicine (EDIT), which was up 192% for one year at $90.6.

Pacific Biosciences (PACB) has been on our coverage for many years and our patience paid off in 2020/2021, with a one year gain of 326% to the $36 handle.

We provided timely coverage of coronavirus plays and many diagnostics stocks were big winners, such as Genmark Diagnostics (GNMK), another four-bagger at $16.63. Other big winners in 2020 were DHR, NSTG, QDEL, TMO, and VCYT. All companies were covered by us in past years, but are not owned now. Our current core holdings favor the following Life Science and MedTech funds: FBIOX, FSMEX, and PRHSX.

Our Favorite Bull Trade is the XBI; Quite Volatile, But Up 84% Over One Year

A big week lies ahead with a catch-up challenge for COVID-19 vaccines, with only 6 million administered out of 21 million units shipped. Economic data is coming as well. Despite the political turmoil, the market should be buoyed by additional stimulus. But with all this momentum, a 10% correction is expected in February, if not this month.