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Momentum  Model for Trading SMID Biotech Stocks

Biotech stocks are poised for a recovery in a seasonally strong period through January 2025.

Small and mid-cap (SMID) have greater momentum for gains assuming inflation remains benign.

Our model tracks a group of biotechs screen for technology, pipelines, technicals and balance sheet.

Market sentiment remains strong boosted by the Trump agenda and recent pick of Scott Bessent for Treasury Secretary. The bullish thesis remains that the market will rotate into small and mid-cap (SMID) stocks which includes biotech.We are developing a trading model based upon a criteria that we can eventually quantify, but for now ls based upon technicals and our knowledge of the market and technology. For example, we screened  the companies for having adequate financial resources,balance sheet, analyst coverage, management team etc.  We can then track news and product milestones to see if the valuation gets a bump up that holds. This  model  is an ambitious goal which we would transition to an algorithmic model.  From the aspect of risk and portfolio management SMID stocks should represent about 10% or less of any healthcare portfolio.We are past the monthly angst of the latest FED drama and the market seems to believe interest rate risk is down. One more rate cut is expected in December. Biotech stocks do not like rising rates because they are always raising funds. Keep in mind that this list of SMID stocks is highly speculative, volatile and for experienced traders, however we hope to build a portfolio of stocks that are less volatile and have M&A potential. Based on today’s follow-up action you may want to rebalance your SMID cap holdings. An alternative to trading SMID life science stocks is to own a  health science fund like FBIOX or PRHSX.Treasury rates have been declining with the 10 year treasury yieid down to the 4.3% level today. Overall strength of small indices helps with the IWM up 18.96% YTD the IJR up 15.52 % YTD. The ARKG is down 27.37% YTD but the XBI has recovered off the recent bottom around $92 and is in an uptrend to the $98. There are several SMID biotech  stocks were good trades recently: EXEL, GH, ROIV, SUPN, VCEL, VCYT etc.Bounce off recent bottom for XBI and IBB.
Here are some points to consider when trading these stocks:

ETF correlation is a good place to start. The XBI is an equal weighted biotech fund that gets rebalanced frequently to show the overall strength of the market. If the XBI shows momentum your speculative stock will probably show gains.

In a bull market like 2021-22 almost all well researched speculative biotech picks with sponsors went up. In today’s more large cap  MAG dominant market stock picking is more difficult so better play the long term with a Fund or an ETF.

Many of these stocks have been good for traders for short term results but our objective is to find the big winner in a burgeoning market like sequencing and immuno-oncology about 7-10 years ago.

This is NOT a buy list and we will modify it from time to time. Last columns shows stock performance YTD and short term trend. RSI is relative strength. (Source FinVIz and yahoo Finance.)

                          %YTD %MTD                                                                               COMPANY Ticker                               11/13             P       P % P % % MCAP RSI Trend     P 1/20/23 Initial 2/4/23   12/24/23   YTD %   4/8/24 % 11/23/24 YTD MTD $B   h                                     Adaptive BiioTech ADPT     4.11   5       2.6 -46.94 4.69 -4.29 3.08 0.69 44.2 – 11/8 Acumen Therap ABOS     5.29   3.57   -33.89   3.17 -17.45 2.37 -38.28 -12.22 -0.142 41.9 d 3/1 Avidity Sciences RNA new 7/1/24             25   43.25 378 -7.41 5.16 45.62 – 11/13 Catalyst Pharma CPRX     16.1   16.58   -10.86   14.89 11.42 21.48 27.78 2.19 2.56 48.9 u 11/8 Caribou Biosci CRBU     6.29   6.17   -0.175   3.71 -35.25 2.02 -65 2.54 0.183 45.32 d 2/27 CorMedix CRMD         3.9       5.31 41.22 9.96 165 -11 0.604 44.29 – 10/28 Crenetics CRNX                 42.12 18.38 56 57 -4 5.19 47 – 11/8 CRSPR Therap CRSP 49.61 -25 55.27   63.67   56.63   53.91 -13.88 47.88 -23.61 -1.3 4.1 48.07 d 2/27 Cryoport CYRX 21.75 -42.34 25.24   16.09   -7.26   16.38 5.75 6.56 -58 -9.5 0.324 38.7 d 4/10 Cytokinetics CYTK         31       65.34 -21.74 49.1 -41 -8.78 6.24 39.46 d 1/8 Denali DNLI     22           19.21 -9 24.69 15 -6.41 3.55 38.85 u 11/8 Exelixis EXEL     22.25           23.75 -1.21 35.61 48.14 24..25 10.16 72.44 u 11/8 Evolent Health EVH 30.83 13.74 31.96   32.08   14.25   27.65 -16.29 11.25 -66 -51.5 1.3 21.84 d 3/6 Geron GERN 3.19 9.24 3.22   2.29   -5.37   3.79 79.62 4.07 92.9 3 2.45 50.6 – 8/12 Guardent Health GH 11/6 25                 32.65 20.7 56.7 4.03 74.2 u 7/30 Humacyte HUMA new* 8/1/24 8.25               4.48 58 -17 0/577 37.8 d 7/31 Ilumina ILMN new* 10/4/24 143               140/14 4.8 -3.49 23.2 48 – 11/5 Intelllia NTLA                 25.5   14.3 -53 -30.8 1.456 39.75 d2/28 Immatics IMTX     9.3   9.9   13.66   10 -4.94 7.59 -27.9 -21 -0.92 19.83 d 3/1 Natera NTRA         60       91.66 46.33 167.26 167 38.8 22 71.64 u 11/22 Pacific Biosci PACB 11.29 55.68 11.58   8.59   5   1.47 -85 1.8 -81.6 -2.17 0.53 44.68 d 1/5 Novavax NVAX                 3.67 – 9.75 103 -19 1.6 41.69 – Quidel-Ortho QDEL new 9/16/24 44               40.14 -45.5 0.75 2.7 51.58

d 1/2/24

Recursion Pharm RXRX         10.75       8.12 -17.65 5.7 -42 -15.68 2.2 36.56 d 2/27 Rezolute RZLT new 7/8/24 4.25               5.78 394 0.41 0.284 41.19 u 11/8 Roivant ROIV         11.4       11.03 -1.78 12.53 11.58 7.83 9.1 64.96 u 11/22 Supernus SUPN 40.3 12.3 41.61   29.23   -18.05   30.07 3.9 36.22 25.16 1.12 1.87 56.73 u 11/13 Tempest AI TEM new 7/10/24 52               58.6 46.5 20.38 9.22 53.38 u 11/12 Twist Biosci TWST     18   3.76   34.03   31.54 -14.53 42.23 14.7 -6.88 2.5 8.97 – 7/22 10x Genomics TXG     47.84   56.58   55.27   27.59 -50.79 14.3 -74.4 -6.9 1.73 40.99 d 1/8                                     Vericel VCEL     31   34.75   31.93   46.05 29.32 59.11 66 43.5 2.9 73.99 u 11.22 Veracyte VCYT 24.89 39.43 26.67   28.27   19.13   39.6 -29.81 39.6 43.1 19.5 3.06 63.29 u 11/22 Wave Life Sci WVE new 10/26 14.45               14.3 183 -6.56 2.24 54.33 u 11/12                                     SPDR Biotech XBI 86.99 14.75 90.39   87.62   5.57   83.49 -6.51 96.24 7.8 -1.95   6.17 u                                     iShares BIO IBB         133.77   -1.89   132.51 -2.48 137.96 1.65 -4.19   42.2 u HealthcareSPDR XLV         135.02   –   143.22 5.02 144.16 11.82 -4.74   39 – iShares MedTEch IHI         53.65   57.3   6.17 55.79 60.35 11.82 1.04   58.83 u                                     ArkGenomics ARKG     35.28   32.81   16.22   23.18 -29.35 23.83 -27.37 -2.18   46.78 d                                     T.RowePrice PRHSX         86.84   -3.32   92.49 5.22 94.43 7.43 -4.79       FidoSelBiotech FBIOX         1763           20.42 14.53 -5.59       FIdoMedTech FSMEX         61.77       64.23   68.03 9.8 0.74       JANUS Life Sci JNGLX                     76.02 9.97 -4.96    

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