Biotech Stocks Caught Snoozing in Today’s Rally

Dow Jones up 1.78%, NASDAQ up 1.09%, S&P up 1.41%

Large Cap Earnings Reports Begin This Week

Healthcare and biotech stocks were lagging the big rally today with the IBB near the flat line down and the XLV barely up 0.5%. Energy and material stocks were up sharply lifting the Dow and the S&P up over 1.5% in an abrupt reversal from yesterday’s gloomy session. the market has been fixated on crude and today March crude futures rallied to $32 boosting the XLE 3.78% at the $55 ‘handle” its support level for January. Large cap energy movers were drillers like Schlumberger Ltd. (SLB) up 3.21% and Andarko Petroleum (APC) up 7% as well as refiners Valero (VLO) up 3.95%. Materials had huge moves up 3% led by miners, steel and chemicals even Corning (GLW) up 5.49% on an earnings beat.

The IBB has been in a 4 day holding pattern near the 280 level after a 10 point move off 2016 lows last week. The small cap weighted XBI is faring worse YTD down 23% and trying to hold support near the $54 level. We posted an article on large cap biopharmaceuticals which will look at technicals and earnings trends of the Top Eight Companies in order to get a better perspective on 2016 leadership. We expect large caps to outperform in the current “risk-off” mentality clouded by macro issues like China and global growth. Of some concern is that the J.P.Morgan Healthcare Conference did not provide a buying catalyst despite all the pipeline updates.