Defense Wins Championships:

The healthcare arena has something for every investor. One can have exposure to the more “defensive”, big cap dividend paying pharma plays, or have representation in the “risk on” beta biotechs. Or of course they can have both. Thus far in 2020 with nearly a month gone by, investors seem to prefer the former as the XLV is UNCH, while the XBI is off by 3.5%. I was surprised to see AMGN, losing a devilish 6.6% last week, its second worst weekly decline in a year. REGN lost more than 10% last week, and now trades in bear market mode off 23% from most recent 52 week highs near the very round 400 number. Looking at pharma leaders like BMY, which has traded above its upward sloping 50 day SMA since last summer, or an LLY which barely budged last week and is spooning the round 140 number very tautly, it is easy to see the affinity for those names. But the chart below shows the present situation in the XBI, and a swift 10% correction may be offering good risk/reward. Time to go on the offensive with a tight stop?

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