One of my favorite groups off the March lows has been biotechnology (IBB) . The sector bounced close to 60% with many individual names doing even better. The IBB (iShares Nasdaq Biotechnology ETF) topped on 7/20 and is now testing its 50-day moving average.
There has been some broad pressure in the group today and yesterday, and I suspect that it may have something to do with increased talk about drug pricing controls. Many of these biotechnology names have promising drugs but if pricing is constrained it will have a major impact on valuation. There is a long way to go before there will be any actual legislation but the election in November will have an impact on this as well.
In the meanwhile, I'm seeing a number of stocks pulling back without any regard to their individual merits. Some of the names on my shopping list include: (OCUL) , (PSNL) , (AUPH) , (FENC) , (MYOV) , (TRIL) , (MYOK) , (OTLK) , (AXSM) , (MEIP) , (KPTI) , and several more.
Most of these charts are not particularly attractive at this point but I'll be looking for some support levels to form and will be interested in accumulating on upticks rather than further downticks.
Biotechnology is always high risk but the right plays move unlike anything else.
We are on hold now as we await the Fed. I expect to see some choppy action on the news.
