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Biotech Bear Market: Another Bad Day IBB Down 2.9%

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

Another Bad Day in Biotech: See the Big Sell-Off Across the Board

The large cap biopharma earnings season is almost complete with Regeneron (NASDAQ:REGN) up on Thursday. We will update our financial metrics on Large Cap Biopharma Winners and Losers on Friday. Most large caps are weak after earnings.

  • Our large cap picks remain: ABBV, BMY, GILD and RHHBY. Gilead Sciences (NASDAQ:GILD) took a big hit on earnings and is down 15% since last thursday.
  • Our only speculative pick bluebird bio (BLUE) is quite volatile in a trading range of $40-55 over the past three months. BLUE is an emerging small cap focused in gene therapy for genetic and rare diseases with clinical stage CAR-T and lentiviral technology.
  • The technicals are not looking good lately. The IBB peaked at $288 on April 22 and is down 4.5% over one month and is down 23% YTD. The XBI peaked at $58 and is down 5.7% for one month and 26% YTD. XBI is our favorite trading vehicle during positive momentum.
  • We published a review of major ETFs and Mutual Funds in the biotechnology and health sciences sector and will complete Part-2 by the end of the month. More diversified ETFs such as the XLV and health sciences funds such as PRHSX have outperformed "pure play" biotech.
  • NASDAQ is down 5.55% YTD and 5.7% over 12 months to 4727 clearly a bear market indicator. Best case for now would be to hold support at 4600.
  • We currently have no new picks in diagnostics and tools but expect value plays to pop up in the coming months. Our 2015 Top Pick ThermoFisher Scientific (NYSE:TMO) is holding up well up 1.83%. Sequencing was the big trend over ythe past 3 years but the stocks got way overextended such as Illumina (NASDAQ:ILMN) down 29.7% YTD and 29.4% over 12 mos. ILMN peaked at $240 on JULY 20 during the bubblicious summer of 2015 .
  • We expect M&A to pick up in the coming months because of cheap financing and the slow growth of company revenues. A good example is the bid for Medivation (NASDAQ:MDVN) by Sanofi SA (NYSE:SNY). MDVN is up 93.2% over 3 months to $59..The market cap is $9.67B with a Price/Sales at 10.

Risk Remains OFF

Disclosure: I am/we are long ABBV, BMY, BLUE, RHHBY.