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Six Week Rally on Pause as Treasury Rates Rise with 10 Year Yield at 4.17.

• SMID Biotechs in a broad decline to a “red screen day”, Russell 2000 off 1.57%, IJR off 1.76%.
• XLV down 1.18 %, IBB down 1.3%, XBI down 1.64%.CRMD up 1.73% to $11.20. Wild volatility in more speculative biotech  names. Will be reviewed over the weekend.
• Many large caps have already corrected off highs but MRK and REGN were down over 2% today.

A few take-always from early earnings results but today it’s all about treasury yields rising. Mega-cap tech stocks held up- AAPL, AMD, GOOG, NVDA-but rate sensitive even dividend stocks lost ground. Financials (XLF) and Real Estate (XLRE) were losers. There has been a shift in  healthcare stock performance by sub-sector which should be confirmed as we move through the Q3 earnings cycle, with Danaher and Thermo Fisher on deck. Next week is a big week for large healthcare and biopharma companies. So it looks like a risk off situation but earnings have been good. so we’ll need several days to sort it out.

Performance for last week and YTD 10/20:

1. The  MEDtech Sector US Medical Device (IHI) up 2.5% MTD and 11.75% YTD looks like an uptrend supported  by financial results from Abbott and Intuitive Surgical. Medical procedures may be finally recovering from the United Health earnings  showing costs are up. BSX earnings coming up this week.
2. Large cap biopharmaceuticals have been weaker over the past month: Abbvie, Merck, Regeneron and some laggard stocks outperformed : BMY, GILD. We need to review upcoming earnings with more scrutiny in light of recent weakness bt ABBV, MRK and VRTX are finding a buying range
3. Mutual Funds  we follow have outperformed ETFs as stock picking is more important. THE XLV was hit by being overweight UNH and
4. Although it does not show up in the XBI small cap BIOTECHs show good momentum and  selected stocks are expected to do well in Q4. Som of the winners among our LIfeScience trades are: ADPT, CPRX, CRMD, CRNX, EXEL, GERN, NTRA and VCYT.
5. Recent buys are Becton Dickinson (BDX),  llumina (ILMN) and Pfizer (PFE). We’ll have to wait until rnext week for earnings from ABBV,

Rayno Life Science

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