February 26th Biotech Update

First, I apologize for the emails last night. We all received them as well and no one understands why quite yet. We are looking into it right now and hopefully it was a simple one time glitch. We now have had two big down days in a row and is starting to put some fear […]

February 25 Biotech Update

Today will be interesting for the markets. As I noted, the market has trained most to buy the dips and big sell-offs are followed by new highs. The gap up this morning could all but confirm that we are no longer in that type of market. If the gap turns into a gap and go, […]

February 24th Biotech Update

As I have been saying COVID risk will re-enter the market when (if) it expands outside of China and we now have 4 potential non-China epidemics in the works with Japan, South Korea, Italy and Iran. The weekend did not see any of these potential risks decrease and so we open the week lower. Traders […]

February 21st Biotech Update

I am back and the sector has barely changed. I do feel, however, that we are closer to a move lower than before. The market seems to be revising both the scale of the COVID epidemic as well as its economic impact. If that is true then the next move will very likely be lower […]

February 19th Biotech Update

The curious case of the flat market continues. At this point, I would call it a clear trend (with the trend being sideways). I know I have been waiting for the move out of this sideways actions and thought it was imminent but at this point perhaps we treat it like any other trend and […]

February 18th Biotech Update

What an odd market. Fundamentally it should be struggling. It was overbought and PE stretched and we are now starting to see earnings warnings from the corona virus and yet it is likely to continue to move higher. Biotechs had the worst JPM in terms of tepid news flow and a slew of secondaries since […]

February 14th Biotech Update

You remember how I believed that the sector was at a decision point and was unlikely to hang out close to the recent highs without breaking out or breaking down? Yes, I remember too and of course that is exactly what seems to have happened. While I remain surprised this happened, it does not change […]

February 11 Biotech Update

The sector seems to be in decision mode. It is hanging right around the recent highs and it is almost as if the market is trying to make up its mind as to whether or not it wants to bust through the recent highs. I doubt we simply hang at these levels for long. A […]

February 10 Biotech Update

Last Monday we were following a weak end to the previous week and I expected that to continue early in the week but instead we had a pretty strong rally. Last Friday was another weak day and so one would expect follow through but given last Monday, perhaps not. I am still convinced that the […]

February 7th Biotech Update

The sector seems to be in an odd spot. Fundamentals look fine and the trading is not awful but the chart looks precarious. We might have 3 lower highs and 3 lower lows right now. It almost looks like a broadening top but that usually sees higher highs as well as lower lowers. The chart […]

February 5 Biotech Update

So the sell off last week seemed like the market looking for news to sell off on and today it seems the opposite. Corona virus fears continue to decline and we see a market rally and even oil is rallying today. I think market expectations are now that the epidemic will continue to grow in […]

February 4 Biotech Update

The market and sector have done much better this week than I expected. It is time to revisit my views as despite the many headwinds and issues that continue to betwixt the global economy the market is the market. One cannot ignore the strength and fight the windmill. I still see a lot of headwinds […]

February 3 Biotech Update

The market is off to a good start this morning but I suspect we fade. The old saying goes that markets never bottom on Fridays and typically when you have a big selloffs on Friday and a bounce Monday morning, the bounce ultimately fades and fails. We will see. We still have some macro that […]

January 31 Biotech Update

The market seems on edge. It looks like people want to sell but have been so trained to be the dips that it is almost like muscle memory at this point. This sets up for a very quick and severe drop if it happens. In other words, if the market suddenly thinks this dip will […]

The PTI Bear Case

Proteostasis Therapeutics is a small biotech company focused on the development of treatments for cystic fibrosis. To their credit, they have 3 compounds, each of a different class in the clinic. This is crucial because the current standard of care for CF relies on combination therapy. Vertex laid out a blueprint for CF treatment through […]

January 29 Biotech Update

The sector and market seem to be trying to make a decision. There was a decent selloff and now the bounce. Is the bounce just resetting the short term oversold conditions for another leg lower or has the selloff provided the dip that the longer term trend higher needed. I am not sure either way […]

January 28 Biotech Update

The sector bounced right where you would expect, which is a positive sign. I am still not convinced that it is setting up well for the near term but you have to respect that it bounced right where support should have existed. This actually sets up for some clarity going forward. If those lows are […]

January 27 Biotech Update

We are heading into a perfect storm for weakness, so stay nimble and/or hedged. The sector has had a nice run and was overbought. We had an uneventful JPM and are set for a series of post-JPM secondaries. The broader market is going to be weak given growing pandemic fears (and the real impact it […]

January 24 Biotech Update

Thanks to everyone who was on the stream yesterday and those that watched afterwards. Not much has really changed between now and then. The sector appears relatively weak but perhaps more range bound than anything else. I would look at the $91.50 or so level on the XBI as the bottom of the range. I […]