Biotech stocks are Poised for Another Run in 2020

A momentum market can be hard to trade and that is why you need to always have core positions like funds and ETFs. Our two long term funds are doing well in 2020 and longer-term because we’re in a secular bull market for biotech stocks. Among the fundamental drivers you know if you have been reading our columns:

• Breakthrough biopharmaceuticals offer potential treatments for the Coronavirus pandemic.
• Molecular diagnostics are needed to diagnose, control, and track the virus.
• Biotech stocks offer top-line growth which is hard to find.
• M&A is picking up with recent deal for Immunomedics and MyoKardia.

Recently we offered a playbook for investing in the biotech sector. To simplify this further here are two Mutual Funds that are long term holds:

Fidelity Select Biotechnology Portfolio (FBIOX), holds major large caps like ABBV, REGN, AMGN, VRTX plus many mid-caps. Up over 15% YTD.

T.Rowe Price Health Sciences Fund (PRHSX), a diversified fund with major large caps in devices, diagnostics and tools, and healthcare like UNH, VRTX, TMO, BDX, and DHR.

You can complement your portfolio by trading or holding the largest ETFs :

The SPDR S&P Biotech (XBI) the best indicator for momentum and bullishness is up over 3% today at $118 level. It favors mid and small caps and reached a high in July but is still up 24% YTD.

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The large-cap weighted iShares Nasdaq Biotechnology (IBB) is up 17% YTD and tracks the FBIOX well.

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We also provided near-term trades that have done well over on month: Orasure Technologies (OSUR), Pacific Biosciences (PACB), Vir Biotechnology (VIR).

What is unusual about today’s trading is that mid-caps and gene therapy stocks are doing well a bullish sign.

Coronavirus stocks running today: GNMK up %, MRNA up 3%, NOVX up 2.4%, QDEL up 11%, TDOC up 2.4% etc etc

But remember it is a momentum market with politics as an overhang.