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Stealth Sell-Off In Biotech Stocks: AEGR, INCY, MDVN, REGN, PCYC

|Includes: INCY, Novelion Therapeutics, Inc. (NVLN), XBI

Biotech Update 11/7 1:15P Continued Weakness in Momentum-- NASDAQ down 52 pts or 1.3%

The weakness from yesterday continued through today as part of a general repositioning trend somehow coinciding with the Twitter IPO. Many social media stocks are weak FB, YELP, ZNGA as are high flying NFLX and TSLA.

Within biopharmaceuticals profit taking remains in evidence with many of our names weak today: ALXN, REGN, SGEN but upticks and buying support exists in ALKS, PCYC,VPHM.

The big winner today is Geron (NASDAQ:GERN) up 64% on drug data to $6 off a $1.50 low earlier this year.

We are now at technical support levels and above (IBB at $200) or near the sell-off low of October 9. Many momentum and mid-cap high fliers have had blow-off or double tops and should be avoided: AEGR, CLDX, SRPT etc. Large caps are favored over smaller caps until the consolidation runs its course.

Biotechnology Momentum In Reverse?

High Flyers Take Another Hit

I was surprised to see the dramatic sell-off in many biopharmaceutical shares on average but building volume. As of early 11:15a EST trading a red screen dominated. This trend bears watching as the NASDAQ has also reversed and is now down 0.38% to 3924. Yesterday there was weakness in two ETFs that have more speculative biotech shares and today both FBT ($61.93) down 2.79% and XBI ($116 ) down 3.8% are weak. The IBB ($201) is also down 2.9%. For now let's assume this is profit taking but there could be more behind the sell-off.

Our mid-cap biopharma index of 40 stocks is all red except ACOR up 1.8% and ECYT up 26.8%. Larger cap stocks -AMGN,BIIB, GILD-are down about 1%.

We will update after the close to look for underlying trends.

Disclosure: I am short AEGR, INCY.

Additional disclosure: Long Fidelity Select Biotech FBIOX, short selected biotechs as hedge.