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Healthcare Stocks Are Looking Better

• This is a momentum market so watch SMID biotechs for consistent rallies.
• Large cap biopharmacuiticals remain a core holding for growth and value despite political cross-currents on drug pricing.
• Assuming a 5-10% correction healthcare may be less volatile than the S&P or Tech sector.

Healthcare stocks are looking better with the XLV up 44 pts about 20%% off the November lows at $122.59. Of course if you’ve been trading tech stocks you barely noticed it because of the momentum in chip and software stocks. For example led by the AI theme chip stocks have been on a rampage over the past 6 months with Applied Materials (AMAT)  up 44.35%, Advanced Micro Devices (AMD). up 62.21%, and NVDIA  (NVDA) up 66.98%. And presumably unlike the tech stock run of 1999, this momentum has been driven by projected revenue growth as tech behemoths shift to the AI paradigm.AT the top down Indices level the QQQ is up 18.76 % over 6 months and 41.96% over one year.

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In contrast the health care and biotech sector performed as follows:

IBB up 7.57% over 6 mos yet only 2.76% in one year.

XBI up 19.3% over 6 mos and 9.89 % in one year. Bulish at breakthrough cusp.

IHI up 8.54% over 6 mos and 6.33% in one year.

XLV up 8.23% over 6 mos and 11.31% in one year.

PRHSX our Favorite Fund is up 7% YTD,

So clearly the healthcare is trending better led by large cap biopharmaceuticals with new blockbuster products and a revival in M&A. The XLV previously outperformed because of United Health (UNH) which tends to have consistent performance due to demographics and stable growth.. Lately however the performance of the XLV has improved because of large cap biopharma and medtech.

In recent posts we covered healthcare funds, ETFs and Large Cap Biopharmaceuticals but if the Biotech Sector can recover it will require SMID stocks to regain momentm of 2022 highs. While this is hard to project or rationalize, it looks poised for a breakthrough at least for traders. But volatility can mask trends.

We can look at  SMID biotech stocks broadly per the following subsectors: cellular therapy, diagnostics and tools, gene therapy, genomics and sequencing and immuno-oncology. And here is an updated list of SMID stocks and ETFs to watch or trade. We will update this list periodically with breaking news. We will focus in the coming weeks on genomics and gene therapy as well as some of the newer picks.

Focus Stocks: CRBU, CRSPR, ILMN, ROIV, RXRX, TWST, TXG, VCEL.

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