The “stay at home ” trend  has pushed FAANG mega-cap stocks to new highs eclipsing the hot Coronavirus trades. In recent posts we cautioned on “Strong Headwinds” for biotech stocks and potential volatility because of speculation in COVID vaccine stocks. We believe that the easy trades have been made so have ample cash and core positions that can survive the doldrums of August and expected volatility of the fourth quarter. But today the bulls were back in it buying everything. The economy and the market wants solutions to the pandemic and biotech seems to have breaking news on therapies and vaccines for traders daily.

Over the past week you can see the weakness in biotech and coronavirus plays in the chart below (not including todays prices). In the coming week we will look at three trends in particular that can help with trading.

1. Technicals – The XBI is a bellwether, off 10% from the July 20 peak to the $109 level until today back to $113. We have recommended this ETF as a trade for re-balancing your portfolio. So the trade would be to add more XBI beta ,on weakness,to your biotech portfolio assuming the bull market runs through 2020. The IBB was also up 3.13% today trying to claw back from recent small losses.

2.  Highly speculative COVID vaccine stocks rallied today with top winners: NVAX up 8.92%, INO up 6.43%,  MRNA up 5.24%, BNTX up 4.09%. Billions of dollars of private and government money has been invested in these and several  large biopharma companies to develop vaccines in record time. The technology and resources give the market some confidence for a Q4 launch. The stocks are excellent trading vehicles but  require a weekly feed of positive news to maintain momentum. Large short positions squeezed by the longs can also help momentum.

3. Our Core positions did well today: AstraZeneca (AZN), Gilead Sciences (GILD), Genmark Dx (GNMK), Hologic (HOLX), Vir Biotechnology (VIR).

Trading can be lucrative but be ready for quick exits. Big vaccine moves were made early this year and many traders are playing with “house money”.

In news today both Lilly (LLY) and Merck (MRK) made announcements on antiviral drugs in development . With Gilead’s remdesivir already showing promise look for more breakthrough antiviral developments ahead.

Prices updated thru July 31.