Ishares Nasdaq Biotechnology (IBB)

Biotech’s have gone through a lot of negativity. Seasonally, right around now is when this sector starts to get accumulated by the professionals, because we get into the fall and Christmas area where there is a lot of biotech conferences. Typically, about 70% of all announcements are made somewhere between November and January in Biotechs.

In the past few days there has been a huge run up since mid-May, and has bounced off significant support 3 times since February. It is bumping up against resistance of about $290. If it can break above that, it could imply significant upside potential. Chart shows a downward trend line and is currently bumping up against resistance, but shows a nice triple bottom.

Biotech is a very volatile area of the market. This index has options on it. If you are a believer in Biotech, then you are really saying you are a growth investor that has a speculative bent that is looking for a real big move. Rather than paying $250 or so, you might want to think about getting an at the money call option, paying $20, and go for the ride. The worst case scenario is that you will lose $20.

(A Top Pick April 21/15. Down 23.24%.) For 3 years, biotech lead the market. In October last year, virtually the day that Hillary Clinton made comments on drug pricing, it was over. He was stopped out and now has a zero weight in biotechs.

Biotech companies in the US. He likes the space. He owns two biotech names individually. He thinks the space is being misunderstood. He thinks there is opportunity here. He likes the look of the chart.

Feels Biotech would be better than Pharma, as it wouldn’t be a target of the Clinton administration. Thinks big Pharma companies will be closing down their research, and basically outsourcing it to biotech companies. This would be taking a lot of risk, but if you can stomach the volatility it will probably work, and you might get the currency working for you too.

The biotech space continues to be impressive, when you look at the aging demographics globally and what is happening with the growth in the pipelines in some of these companies. He prefers picking individual names that are growing 20%-25%-30% EPS growth rates. However, this is a great way to own an ETF that will give you the entire sector.

This has a huge portfolio of lesser-known biotech and pharmaceutical stocks. A little more volatile. Thinks the sector is going to grow quite well. Has been expensive at times, but has sold off recently. A good area if you want to get into the biotechs. With aging population and more money into the healthcare, these guys are going to do very well.

Momentum plays. The volatility is three times that of a company like IBM. They need to consolidate. Look to the lows recently for where support might be. The trend of falling highs is the resistance.

Everybody should have some biotech in their portfolio. These are companies that develop drugs that help our friends and relatives, and are a very important part of the economy. Extremely volatile. There is probably no other sector out there that will give you such huge potential over such a short period of time. Of the companies with over $500 million market cap, 81% of them are 10% below their 52 week high, and this is a great time to buy it.

Biotech ETF? His pick would be this one. This is a little bit on the high-end, but not unreasonable.

Within the healthcare space, biotech is one of the better valued areas. When you look at some of the names, they offer very good value as well as very good growth. This one has done well, so layer into it at this time.

The only knock that anybody can have about this is that it keeps going higher. The names it holds has to keep going through new highs. If you have owned this for a long time, the selling strategy is to bring it back if it has become too large a portion of your portfolio. Also, you have probably made a lot of money on the currency if you have owned it for a long time. He likes the diversity.

Biotechs mostly don’t pay dividends. When you get into a growth and momentum trade and the stock has doubled in a year or two, then it is not sustainable. He feels there is no value here. Look to take money off the table at some point, not put money in.

This is a biotech ETF, and would be the main one he would look at for this sector.