Energy Stocks Down; Biotech and Healthcare Stocks Are Leaders

NASDAQ Up 1.30%     4787

After a few days in the doldrums, biotech stocks rallied across the board, escaping the drag of macro news. Healthcare and technology sectors were among the leaders of the day, moving in the opposite direction from energy. There have been dual perceptions of the energy free-fall, one being that it means slower global growth ahead, the other view meaning it puts more money into consumer spending and industry. Crude was off 5.2% to $50.09.

Here is the scoreboard among Rayno stocks and Life Science motifs we follow:

Major ETFs

IBB up 1.55% XLV up 1.68% XBI up 2.27%

We are within 3-4% of all time and YTD highs for major ETFs. Our top pick is FBT, up 5.94% YTD, and the leader is smaller cap weighted XBI, up 6.7%. On big rally days XBI tends to outperform other ETFs. Here is our ETF review as of 2/1/15. We will track returns and holdings of major ETFs through the months to assess performance during rallies and corrections. The major issue for the year is whether ETFs will continue to outperform mutual funds.

Large Cap Biopharmaceutical Motif

Large caps were green, except Biogen -Idec (BIIB) was off 0.44%. Leaders were Alexion (ALXN) up 2.9%,  Amgen (AMGN) up 2.25% and Gilead (GILD) up 1.47%.

Mid-Cap Biopharmaceuticals Motif

There was a strong rally in mid-caps with Rayno leaders Alkermes (ALKS) up 4.88% , Clovis Oncology (CLVS) up 4.77% and Pharmacyclics (PCYC) up 1.29%. Seattle Genetics (SGEN) was a laggard down 1.82%.

Immuno-oncology stocks were strong today with usual suspects soaring: AGIO, BLUE, JUNO, KITE, ZIOP. In the face-off between Gilead Sciences up 4.28% YTD vs Celgene (CELG) up 7.42% YTD we will compare other metrics in the future but Cramer of CNBC believes CELG has the bets long term potential.

Diagnostics and Tools stocks were strong with many companies reporting this week and the month ahead. Large cap drug stocks looked strong: Allergan (AGN), Abbvie (ABBV) and Pfizer (PFE).

Portfolio Strategy

• Own a basket of life science stocks or one ETF plus a leading fund such as Fidelity Select Bioscience Portfolio (FBIOX).
• Our new picks over the past few months were: Clovis Oncology (CLVS) at $60 and Foundation Medicine (FMI) at $25.
• Take profits on weak stocks in our portfolio if momentum continues to ease.
• Aggressive traders should be more cautious as the huge gains will not be so easy in 2015.