Bear Market Mentality Hits Biotech
FBT 110.5 down 1.23% YTD
IBB $296 down 2.3% YTD
XBI $61.8 flat YTD
XLV down 4.74% YTD
Fidelity Select Biotech Fund (FBIOX) $212 down 4% YTD
Review Previous Articles on Biotech Market Trends
The vicious three month sell-off with the IBB down 20% over one month in the six year bull market has created so much psychological damage that a bear market could prevail at least until third quarter earnings gives us clarity. Add new positions with caution keeping in mind that selling prevails.Biotech stocks have been driven to extreme valuations by large hedge funds, investment banks and mutual funds who are primarily momentum investors with huge cash coffers.
We will continue with the “Biotech Market Trends” series adding some new elements to our model now that we have entered a bear market. Four out of five market trends turned negative as we wait earnings in October.The drivers of the 5 year biotech bull market have been: strength in the healthcare sector, M&A, growth from product sales and positive clinical developments. Now we have a change in fundamental factors to consider such as the following:
