Right now, portfolio managers at the big biotech funds are on the phone with anyone and everyone they know in Washingtion, and some that they have on their payrolls. They want to know if Henry Waxman is really insane or if he is just trying to make a statement before he retires. Which is soon. All politicians think they are saving the public from themselves. Investors in the space now want to know if Waxman, in true political fashion, is trying to save the public from mean old pharma/biotech companies, or just justifying his political existence. Waxman’s boxers are in a big twist because $GILD has a pill that costs $1000. He doesn’t tell you that a liver costs maybe $400,000 and it costs the drug companies hundreds of millions to develop the drug to maybe , oh I don’t know, save a life? Waxman’s ilk thinks everything should be free anyway. Mother government.
The biotechs got wrecked with the thinking that if it’s bad for $GILD it has be bad for all of us on a pricing basis.
One biotech that didn’t care on Friday was $ECYT. It got conditional approval in Europe and also had great new on a Phase 2 trial. It was up 92% on Friday. Booyah. Some of the few biotechs that acted well Friday include: $OGXI, $TKMR, $ITMN, $FURX and $HZNP. All have outstanding charts. That doesn’t mean the grim reaper won’t catch up to them this week, but they did act well.
I notice that many are calling Friday’s action a market top. We tagged a new $SPX intraday high and then we rolled over. There are many opinions on this and that’s what makes a market. Short term top maybe, not a top though. I never put a lot of credence in Friday action, especially quadruple witching Fridays. The algos are all tweaking on meth anyway.
The one group that has the wind at its back now are the financials ($XLF). The groups that don’t, are gold, utilities and biotech. Bond equivalent names need to be sold or shorted. Rates are going up. The XLF is at the top of a long channel. If there is a rotation out of these other sectors and into the banks, then expect a very strong run into year end.
Good luck next week.
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