Saturday, September 26, 2015

Friday's Action: Biotechs Blow Up

As we've noted a couple times in the last two weeks:
Early and late stage bulls must have the financials participating. In the middle speculations and lottery tickets confirm where you're at....
The S&P financial sector ETF, XLF, was up 1.47% on an otherwise weak day.
The iShares Nasdaq Biotechnology ETF, IBB, ended down 4.90%.
The triple-levered Direxion BioBeastie was down 20.53% with the inverse up 20.82%.

From Barron's:

Biotech Bombs, Suffers Worst Weekly Decline Since ’08
A rocky week for the broader stock market has inflicted serious damage to exchange-traded funds that track biotechnology stocks.

The $8 billion iShares Nasdaq Biotechnology ETF (IBB) fell 6.5% recent trading on Friday.
The ETF has fallen each day this week, bringing its total five-day decline to 14% — the biggest weekly drop since Oct. 2008, the height of the financial crisis. Worse: IBB entered “bear market” territory based on closing prices, meaning it’s down more than 20% from its recent high. That last happened during last year’s February-April swoon.

Biotechs including Gilead Sciences (GILD), Amgen (AMGN), Biogen (BIIB) and Regeneron (REGN) have been the market’s growth-stock heroes in recent years. And ETFs that own them, including IBB, have become so popular that they’re basically proxies for overall market momentum.

The First Trust NYSE Arca Biotechnology Index ETF (FBT) was down 6%, while the SPDR S&P Biotech ETF (XBI) slumped 7.9%. Smaller, newer funds including the BioShares Biotechnology Products Fund (BBP) dropped more than 6%.
What’s driving this powerful selling? John McNamara on Deutsche Bank’s equity desk says it’s not clear:
“Biotech and Spec Pharma continue to lead the space lower, with news flow continuing to be relatively muted.”