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Bernanke Bounce Carries Biotechs To New Highs Up 1.8%

|Includes:iShares Nasdaq Biotechnology ETF (IBB), REGN

Strong NASDAQ Up 1.35%-IBB Hits 188.82 All Time High

A stealth rally that began with futures after the close yesterday was triggered by Bernanke comments interpreted by the market as backtracking on "tapering". Maybe Bernanke was trying to soften his perceived tapering (not tightening) position to help the trashed bond market (NYSEARCA:LQD) down about 6% YTD. The 10 year treasury yield hit 2.7% this month up from the 2.2% level in early June and a 1.7% yield in early May! Maybe big funds piled on with futures early and forced short covering. Everything is in rally mode today including materials(even gold) and commodities up from multiyear lows. A few analysts believe we are approaching a sweet spot in the market with cheap money and an improving economy.

As has been the trend lately biotech stocks follow NASDAQ bringing momentum back from recent June lows. Almost all Rayno Life Science stocks were up with big winners predominant in the biopharmaceutical sector: Astex (NASDAQ:ASTX) up 4.29%, Immunogen (NASDAQ:IMGN) up 4,29%, Optimer (OPTR ) up 3.94% and Regeneron (REGN) up 4,29%. Many of our focus stocks hit new highs this week. A good indicator of market strength is our index of 50 mid-cap biopharma stocks mostly green up 2.3%.

With froth back in the market we will track three "junior" momentum stocks that are at or near new highs: Aegerion Pharmaceuticals (AEGR $75), Clovis Oncology (CLVS $74) and Sarepta Therapeutics (SRPT $43.18).

We wrote an article last September that few investors knew about biotech stocks, Who Knows About the Bull Market in Biotech Stocks? Well nine months later more people do know and here are some of the underpinnings:

  • Many large cap life science stocks are growth stocks with strong sales and earnings.
  • All types of mutual funds and ETFs are into biotech stocks not just as a sector play.
  • Clinical milestones and drug discovery breakthroughs are in the news.
  • M&A are always a possibility like Onyxx (NASDAQ:ONXX) recently.
  • Hedge funds loaded with cheap funding are more aggressive investors and traders.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I am long Fidelity Select BIotech fund (MUTF:FBIOX)

Stocks: IBB, REGN