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Pop and Drop at the Biotech Corral!
The biotech sector is taking a much-needed rest after a huge rally.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

To follow up Jeff Cooper's post (subscription required) on the intense selling in biotech leaders Gilead Sciences (NASDAQ:GILD) and Incyte (NASDAQ:INCY), I wanted to step back and highlight the big pop and drop in the sector as a whole, because up until late February, it was one heck of a leader.

Biotech serves as a good measure of investors' friendliness with speculative activity as it sits in the middle of pedestrian big-cap techs and the really wild stuff like the fuel cell and marijuana companies.

The two big biotech ETFs, the iShares NASDAQ Biotechnology Index (NASDAQ:IBB) and the SPDR S&P Biotech ETF (NYSEARCA:XBI) were up 65% and 48% in 2013, respectively.

And at their peaks in late February, each was up over 20% year-to-date.

I created a chart showing the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) (shown as multicolored bars) against the relative performance of biotech (calculated as XBI divided by SPY, shown by the blue line). I chose XBI because it's a bit more diversified than IBB.


Click to enlarge

With that blue line, you can see that biotech has had an extended period of extreme outperformance -- and that the upward surge starting in early November 2013 really was a move for the ages.

So even with XBI 11% off its $172.52 February high, it could still use a bit of a break.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Pop and Drop at the Biotech Corral!
The biotech sector is taking a much-needed rest after a huge rally.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

To follow up Jeff Cooper's post (subscription required) on the intense selling in biotech leaders Gilead Sciences (NASDAQ:GILD) and Incyte (NASDAQ:INCY), I wanted to step back and highlight the big pop and drop in the sector as a whole, because up until late February, it was one heck of a leader.

Biotech serves as a good measure of investors' friendliness with speculative activity as it sits in the middle of pedestrian big-cap techs and the really wild stuff like the fuel cell and marijuana companies.

The two big biotech ETFs, the iShares NASDAQ Biotechnology Index (NASDAQ:IBB) and the SPDR S&P Biotech ETF (NYSEARCA:XBI) were up 65% and 48% in 2013, respectively.

And at their peaks in late February, each was up over 20% year-to-date.

I created a chart showing the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) (shown as multicolored bars) against the relative performance of biotech (calculated as XBI divided by SPY, shown by the blue line). I chose XBI because it's a bit more diversified than IBB.


Click to enlarge

With that blue line, you can see that biotech has had an extended period of extreme outperformance -- and that the upward surge starting in early November 2013 really was a move for the ages.

So even with XBI 11% off its $172.52 February high, it could still use a bit of a break.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
More From Michael Comeau
Daily Recap
Pop and Drop at the Biotech Corral!
The biotech sector is taking a much-needed rest after a huge rally.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

To follow up Jeff Cooper's post (subscription required) on the intense selling in biotech leaders Gilead Sciences (NASDAQ:GILD) and Incyte (NASDAQ:INCY), I wanted to step back and highlight the big pop and drop in the sector as a whole, because up until late February, it was one heck of a leader.

Biotech serves as a good measure of investors' friendliness with speculative activity as it sits in the middle of pedestrian big-cap techs and the really wild stuff like the fuel cell and marijuana companies.

The two big biotech ETFs, the iShares NASDAQ Biotechnology Index (NASDAQ:IBB) and the SPDR S&P Biotech ETF (NYSEARCA:XBI) were up 65% and 48% in 2013, respectively.

And at their peaks in late February, each was up over 20% year-to-date.

I created a chart showing the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) (shown as multicolored bars) against the relative performance of biotech (calculated as XBI divided by SPY, shown by the blue line). I chose XBI because it's a bit more diversified than IBB.


Click to enlarge

With that blue line, you can see that biotech has had an extended period of extreme outperformance -- and that the upward surge starting in early November 2013 really was a move for the ages.

So even with XBI 11% off its $172.52 February high, it could still use a bit of a break.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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