Market Fears Abate -FED Probable Liftoff Brings Confidence to Markets

Green Screen Across Biotech

Biotech stocks ran up along with the general market and the DOW was initially boosted by an Apple (AAPL) upgrade from Goldman Sachs. Then after the release of the FED minutes the market continued to run with the DOW up 247 points. Anxiety from the FED rate increase has abated and the feeling now is that the economy can handle it. NASDAQ was up 89 to 5075.

Here is a market update focusing on Rayno Life Science stocks:

• Technicals remain favorable with the IBB holding well above the 320 intermediate bottom and moving toward the recent 340 top. However keep in mind that the biotech bear market began on 9/17 at 362.50. The XBI at 70 is up 12.74% YTD and a move to 80 would get us out of bear market territory.
• Over the past month the IBB and XBI are tracking more closely.
• The tape today was excellent glossing over the Clovis Oncology (CLVS) news Monday. Momentum is back with big moves in AGIO,BLUE, KITE,ONCE,PBYI and other story stocks in immuno-oncology and CAR-T.
• The healthcare sector overcame pricing concerns and was a leading sector with the XLV up 1.99%.
• Rayno small caps are volatile and new picks from the Bio Investor Forum are soaring: Curis (CRIS) up , Geron (GERN) and Ocera Therapeutics (OCRX). Ignyta (RXDX) is up 34% over one month.
• Even large caps ran up big: Alexion (ALXN) up 3.18%, Biogen (BIIB) up 4.47%, Gilead Sciences (GILD) up 3.44%, Regeneron (REGN) up 2.83% and Vertex (VRTX) up 3.9%.
• Two reiterated Dx and Tools picks for Q4 were strong: Cepheid (CPHD) up 3.71% and Neogen (NEOG) up 1.51%.

The seasonal move in biotech stocks began early in October after a crushing downdraft in August and September. The recovery is well underway so an intermediate move of 5% to September tops would be expected. Hold core positions and if underweight be careful about adding IBB, XBI or even a fund such as Fidelity Select Biotech Portfolio (FBIOX). Investors appear to have more risk appetite for now.