The indices are bouncing around primarily on rumors about China trade and whether U.S. companies will be allowed to supply Huawei with technology. The impeachment drama is receiving much cable news coverage but the markets don't seem to care too much. The Peloton (PTON) IPO has been a flop so far as it has yet to trade above its IPO price. That is hurting sentiment a little but the market is already well aware that unicorn IPO's are on the road to extinction.
I've been complaining quite a bit lately about poor price action in individual stocks and there is no respite today. One group in particular that I'm looking at is biotechnology. The sector has seen substantial outflows and it is obvious that names are being liquidated without regard to their individual prospects.
One example is Sarepta Therapeutics (SRPT) which has dropped from around $159 to $73 since July 15. There has been some news flow but mostly it is just fund liquidation.
Another name I'm looking at is Global Blood (GBT) which has a drug for the treatment of sickle cell disease. The filing was accepted for accelerated approval which caused analysts to raise price targets substantially. Today the stock is trading down over 6% on no news. Nothing has changed but for some reason funds are selling down biotechnology positions. It is probably part of some end of the quarter rotation similar to what we had a couple of weeks ago in the Cloud and Software sectors.
The problem with these sorts of sector rotations is that there is no way to know how long they will last. It is tough to value high momentum software and cloud names and even tougher to value biotechnology stocks that don't have any substantial revenue yet.
At some point, I'd like to buy some of these beaten-up biotechnology stocks but - like most things in the market - the key is timing. I prefer to buy stocks that are going up rather than down and I try not to worry too much about buying at the exact low point. The idea is to buy a positive trend rather than to try to catch a low.
There are quite a few other stocks suffering like this that will be great opportunities as market conditions shift but holding them right now is quite painful.