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Momentum Shifts to Tech and  Big BIopharma Stocks in 2024

• Small Cap traders are taking a break in 2024 as XBI is down 2.51% YTD.
• Widely held United Health (UNH) is down 4.35% YTD. IHF Providers ETF is down 2% YTD.
• Medtech starting to recover from the “Ozempic Effect”.

The nascent bull market is intact with many sectors doing well YTD as investors shift their perspective to upcoming earnings reports and guidance for 2024. The momentum trade in small caps faded through #JPM24 despite a pick-up in M&A. And UNH down 4.35% YTD the mainstay of many healthcare portfolios and funds was rocked by higher costs despite good growth of 15% and an earnings beat. But diversification helped because the Financial sector (XLF)  is up 0.88% YTD, the  Industrials (XLK) up 2.3% YTD, and the S&P (SPY) up 1.5% YTD. Importantly the TECH sector is coming back with the XLK up  4%YTD and the QQQ up 2.85% YTD. Healthcare stocks have been helped by big biopharma as you can see from some our top picks below: ABBV, GILD, LLY, MRK, REGN, and VRTX.

• Despite some weakness in healthcare stocks the XLV was up 2.26% YTD because of overweight in large cap biopharma and medical devices with some re-balancing with longs in DHR, JNJ, TMO.

Small cap speculative stocks had a nice run as we expected up to JPM24 but not enough fuel to keep momentum intact as you can see by the XBI down 2.5% YTD. Similarly, we see ARKG falling 12.13% YTD. We traded out of both of these ETFs and they can be the bellwether of what’s to come with small cap biotechs. Among SMID biotechs holding values since early October: CRSP, CYTK, VCEL, VIAC. The IBB  is waning up only 0.49% YTD.

We added to MedtTech with BSX and more speculative medical device small caps as we expect procedure utilization and testings will pick up as reported by hospitals and insurers. Note that ABT is up 4.2% YTD. A few months ago there were reports that because of the wide of popularity of GLP-1 agonist obesity drugs from Lilly and Novo-Nordisk, there would be lower utllizatioon of medical care so watch for this trend.

But the big story so far in 2024 is your portfolio needs to be overweight TECH because of AI, DATA centers and demand for semiconductors.

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