Bullish Trading in Biotech Stocks-Many Big Movers

Nasdaq up 0.3%;at 10:45am PDT

Fed Leaves Rates Unchanged 11:00am, expects gradual rate hikes; lone dissenting vote; risks diminished.

Biotech stocks continued to drive higher despite the earnings miss in Gilead Sciences (GILD) and a lackluster overall market. A green screen dominated today with significant upward momentum since the Brexit bottom. The IBB hit 284 above our latest target and up 17.6% YTD. Despite widely communicated concerns in the media about drug pricing and echoed in the Democratic platform during their  Convention, investors have moved on past the political environment and bought the sector. The more volatile, equal weighted XBI rallied in tandem up 2% month to date. The sector was bludgeoned last summer after hitting an all time high on July 17,2015. In our last few posts we suggested that the Brexit bottom was an excellent entry point and that prices should be higher by year-end assuming that Nasdaq can rally. The technicals for the sector has been a bit frustrating because of the inability to break through 3 month highs and a triple top.

We are tracking earnings for major biopharma companies and will provide a valuation update after all reports are in. Thus far Gilead Sciences (GILD) is a miss and Biogen (BIIB) is a big win. Amgen (AMGN), Bristol-Myers (BMY) and Celgene (CELG) announce earnings tonight. CELG has already moved up 14% in one month.

Except for our Gilead Sciences (GILD) pick at $85.89, our portfolio is doing quite well including our recent IBB call at the late June bottom. Other picks and initial prices include: ABBV - $56.49, BLUE - $43.75, BMY - $61, FMI - $20.4 and RHHBY - $30.36.

In other significant news another biotech drug developer Kadmon Holdings (KDMN) went public but traded below its $12 issue price raising $75M with a market cap of about $570M. This high profile IPO is a start-up launched by Sam Waksal a well known biotech executive and entrepreneur, who founded Imclone Systems subsequently sold to Lilly (LLY) for over $6B. More later but here is the S-1 for Kadmon Holdings.

We will update this post tomorrow. Risk is still on.

Nice green bar below at 284.