Things were moving along nicely today and then all of a sudden biotech hit a brick wall and began to sell off hard. This also put pressure on the rest of the market.
It all started over Mylan Labs pricing of their EpiPen. Hillary was outraged and decided to post this to her Facebook page. As a result, biotech and IBB sold off hard in sympathy. Whenever pricing regulation gets talked about, its bad for biotech. You remember last year or two ago when Yellen opined that certain sectors were “overpriced”. Everyone knew she meant biotech. Bio came crashing down, but it was short lived and rallied back very substantially to new highs.
Today many biotechs came down 2 to 5%.
The timing was bad too, because IBB was on the cusp (my opinion) of a massive upside breakout today.
As a result we saw some stops in our bio holdings but it wasn’t all bad news because we had great profits and we raised our stops. ANIP stopped +16.1%, BLCM stopped +17.6%, BEAT stopped +13.9%. Unfortunately in the fog of war, INVA stopped -12%. Tech name RPD also stopped out +8.9%. I also sold 1/4 PBYI today for +23.5%. Overall, I’ll take that action.
So it was a good day and some stocks got monetized. This helps clear the infield for more setups.
What I am concerned with and watching now, is whether or not this biotech situation is just a “one off” isolated one day wonder, or something more. It is quite possible we could see more downside tomorrow.
Its good to let the dust settle and for all I know we could be back in some of these same names shortly at better entry levels.
See you in the morning.