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A Pivotal Month for Biotech and Health Science Stocks

The negative sentiment for healthcare was triggered in part by the fallout from the UNH Executive murder. XLV flat over one year.

A seasonal bounce is favored for SMID biotechs because of the “January effect” and investment banking  Conferences.

We  need help from small caps and sector rotation to defensive sectors from strong Infotech.

Have you been spending too much time on biotech and healthcare investing? If you are then maybe your portfolio is underperforming the S&P 500 and even a 60/40 balanced portfolio. The healthcare sector is lagging over the past year and recent quarter with the XLV flat for 2024 and down over 4% for the recent quarter whereas the S&P 500 is up 24% over one year and technology stocks are doing even better up about 25% and financial sector stocks up over 13% in the recent quarter and 45% over one year. Keep in mind that the Healthcare sector is weighted only about 12% in the S&P 500 whereas the technology sector is weighted  over 30%.  Communication and Infotech stocks returned over 30% in 2024. Now some market strategists are recommending to get more defensive by investing in healthcare an obvious laggard so we may see a bounce in the coming weeks from the JPMorgan Healthcare Conference and  earnings reports rom large cap Biopharmaceutical and MedTech companies. So over the next two weeks we will post updates of potential trades in SMID cap biotechs from our Focus Trading List as well as news that may influence your allocation to healthcare stocks.In our latest update last week we gave a brief summary of stocks we own and track. There are many winners among  the SMID Life Science stocks and we want to focus on these trades as they are likely to regain momentum. SMID biotechs bounced with all tracking ETFs up: ARKG, IBB, XBI.  Select Winners over 12 mos. from our trading list: ADPT up 39%, CPRX up 25%, CRMD up 119%, EXEL up 41%, GH up 21%. NTRA up 165%, PTGX up 69%, SUPN up 32%,  TWST up 35%, VCEL up 62%, VCYT up 50%. Keep in mind that the SMID Life Science group has been very weak over the past  month with the XBI down 7% at $92.19. We frequently check the momentum ETF iShares MSCI USA Momentum factor (MTUM) for market direction and it is up over 38% in one year but down 1.86% in one moth. The sector weightings are over 20% in technology and financial services but only 8.16% in healthcare.Review previous posts on Life Sciences Playbook.

Focus on large cap biopharmaceuticals with dividends for core portfolio.

Rebalance with large cap MedTech: ABT, BDX, SYK.

Trade SMID cap life science stocks.

So here are the key tracking ETFs for MOMENTUM in Life Sciences:

                    4/8/24   P 1/5/25 % 12m %1m   RSI                   ArkGenomics ARKG     35.28   32.81   16.22   23.18 -29.35 26.54 -16 -0.45   61 d 40.9                 iShares BIO IBB         133.77   -1.89   135.21 -2.48 135.23 -0.7 -4.34   47.3 d 149                 SPDR Biotech XBI 86.99 14.75 90.39   87.62   5.57   83.49 -6.51 91.28 2.23 -1.95   47.5 d 103.5                

SMID Life Science Trading List-revised 1/5/25

                                                                          u=up                                       f=flat     COMPANY TICKER                               H=high                 P       P % P % % MCAP RSI Trend P/cash       P 1/20/23 Initial 2/4/23   12/24/23   YTD %   4/8/24 % 1/5/25 12 mos MTD $B   u,f,d H                                             Adaptive BiioTech ADPT     4.11   5       2.6 -46.94 7.2 59.3 14.3 1.24 65 u 7.2 5.08   Avidity Sciences RNA new 7/1/24             25   30.5 219 -20.7 3.56 35 d 55 2.24   Bridge BIO Pharm BBIO new 11/30/24 27               28.12 -25.71 5.79 5.3 55.86 f 30.29 13   Catalyst Pharma CPRX     16.1   16.58   -10.86   14.89 11.42 21.31 27.91 -1.84 2.52 47.3 f 23.11 5.69   CorMedix CRMD         3.9       5.31 41.22 8.18 129 -16.2 -0.49 38.18 d 13.85 10.73   Crenetics CRNX                 42.12 18.38 53.15 52 -6 5.08 45.95 d 62.46 5.89   CRSPR Therap CRSP 49.61 -25 55.27   63.67   56.63   53.91 -13.88 41 -34.43 -19.95 3.48 40.58 d 90.62 1.79   Cryoport CYRX 21.75 -42.34 25.24   16.09   -7.26   16.38 5.75 8.49 -43.77 14.11 0.446 49.95 f 19.93 1.64   Cytokinetics CYTK         31       65.34 -21.74 49.36 -43 -4.17 5.88 43.63 f 85.60 5.81   Denali DNLI     22           19.21 -9 21.26 4.57 -11 5.88 43.63 d 25 5.7   Exelixis EXEL     22.25           23.75 -1.21 33.97 43 -3.66 9.7 63.7 u 36.45 8.17   Geron GERN 3.19 9.24 3.22   2.29   -5.37   3.79 79.62 3.57 77.6 -9.62 2.16 42.67 f 4.65 6.26   Guardent Health GH 11/6 25                 33.76 33 -5.65 4.43 59.53 u 38.01 4.44   Ilumina ILMN new* 10/4/24 143               136 7.27 -3.26 22.4 51 f 136 23.86   Natera NTRA         60       91.66 46.33 167.6 183 -0.93 22.1 70.96 u 167 25   Pacific Biosci PACB 11.29 55.68 11.58   8.59   5   1.47 -85 1.99 -78 8.74 0.58 47.22 f 9.81 1.28   Novavax NVAX                 3.67 – 8.85 81 5.23 1.46 44.9 f. 16 1.59   Protagonist Thera PTGX new 12/12 41               39.57 75.5 -4 2.36 47.64 f 46.2 5.11   Quidel-Ortho QDEL new 9/16/24 44               46.66 -35.73 16.48 3.25 56.33 u 62 22.62   Rezolute RZLT   7/8/24 4.25               5.24 424 -2.06 0.303 56.71 f 5.72 2.85   Roivant ROIV         11.4       11.03 -1.78 11.69 7.64 -3.55 8 50.41 f 13 1.53   Supernus SUPN 40.3 12.3 41.61   29.23   -18.05   30.07 3.9 36.92 32.76 -0.3 2.04 60.97 f 37.30 5.12   Tempest AI TEM new 7/10/24 52               38.25 -4.97 -32 6 6.73 d 79.49 14.42   Twist Biosci TWST     18   3.76   34.03   31.54 -14.53 47.33 45.5 -6.48 2.81 52.8 f 4.97 10.65   Vericel VCEL     31   34.75   31.93   46.05 29.32 57.6 69.8 -1.27 2.9 62.87 u 58.14 25   Veracyte VCYT 24.89 39.43 26.67   28.27   19.13   39.6 -29.81 41.91 61.25 -4 3.25 66.6 u 44.13 12.28   Wave Life Sci WVE new 10/26 14.45               13.51 161.8 -3.77 2.09 49 f 16.44 6.72

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