High Flier Tech Stocks Take A Breather

NASDAQ Off 1.34% To 4727

Don’t blame the consumer and retail sales for the sell-off. Investors have done very well this year with simple indexing. The SPY SPDR S&P 500 is up 11.4% YTD, the FBT First Trust Biotechnology Index is up 45.7% YTD and the XLK SPDR Technology Index is up 17.5% YTD. Who needs stock picking when you can cruise with indexing. So what does the AAPL and biotech selloff have to do with retail sales, Black Friday and Cyber Monday? Nothing. Many consumers did their shopping earlier in the week and there are plenty of shopping days left in the year. But coasting through your gains in the market may be over and more volatility lies ahead. MACRO issues will continue to arise and a shakeout from the energy market downturn could effect the global economy.

Look at my post on November 14 when all biotech stocks had a bad day. Also off October lows we had a “V-shaped” upside move more that 20% off the lows, a pretty volatile month. Last Friday a low volume day we saw blow-off moves in some MoMo stocks like Agios Pharmaceuticals (AGIO) down 4.5% today to $96.3 but hitting highs of  $111.60 2 trading days ago. AGIO is up 302% YTD buoyed by support from major biotech specialty institutions and a Celegene (CELG) investment. The market cap is around $3.5B despite a pipeline of only 3 Phase 1 drugs in clinical development. AGIOS lead products are focused in hematologic malignancies with core capabilities in cellular metabolism with the IDH1 and IDH2 mutant inhibitors.

Today the biotech screen is again a solid red although several of our large caps picks were in the green: AMGN, BIIB, GILD and RHBBY. Within the Rayno mid-cap motif Seattle Genetics (SGEN) is down again and down almost 10% YTD. PCYC and VRTX were also down. Small caps are extremely volatile even on relatively low volume: Celldex (CLDX) down 4.5% and GlycoMimetics (GLYC) down 13,3% after hitting highs of $9.50 last week. Another early stage speculative stock Epizyme, Inc. (EPZM) was down 8.18% today to $21 on average volume wiping out gains for the year.