Biotech etf at best level since january; are you braced for bumps?

Biotech etf at best level since january; are you braced for bumps?

Play all audios:

Loading...

Major index ETFs finished flat Tuesday as investors shrugged off weak housing data and awaited the Federal Reserve's decision on interest rates. Biotechnology exchange traded funds rose, and health care led advancing S&P 500 sectors. Shares of SAREPTA THERAPEUTICS (SRPT) have nearly doubled in price since Monday, to just under 56, after federal regulators approved the company's drug for muscular dystrophy. IShares Nasdaq Biotechnology (IBB) popped 1.4% on the STOCK MARKET TODAY. SPDR S&P Biotechnology (XBI) added 2.5% for its best level since early January. This ETF is a play on the biotechnology sector that takes on bigger risk for potentially larger rewards. XBI gives each of 87 stocks an equal weight, or importance. So a small-cap company like Sarepta has roughly the same stake in the portfolio as biotech giants AMGEN (AMGN) or CELGENE (CELG). By contrast, the cap-weighted IBB focuses first and foremost on the biotech majors. More than half of its assets are tied to the top 10 holdings out of 184 stocks, including Amgen, Celgene and BIOGEN (BIIB). Third quarter to date, XBI is up 21.9% vs. 13.3% for IBB. The former also has a modest edge in terms of annual average gains over the past five and 10 years. As prices for biotech stocks have recovered, so has investor interest in the small-cap biotech ETF, said David Mazza, head of research for SPDR ETFs. Year to date, investors have added $303 million in fresh money to XBI. "Recently, price action has been driven by company-specific news and the influence of the U.S. presidential election," Mazza told IBD in an email. Investors should brace for the continued influence of external factors heading into November, he cautioned. Biotech stocks are sensitive to certain remarks of a political nature. Rhetoric about price-gouging in the drug industry tends to intensify ahead of a vote. ------------------------- IBD'S TAKE: _Sarepta's MUSCULAR DYSTROPHY DRUG faced a long and controversial march toward FDA approval, but it may mean the company's growth story is just beginning._ ------------------------- Energy led declining S&P 500 sectors Thursday. Energy Select Sector SPDR (XLE) posted a 0.7% loss. United States Oil (USO), a commodity ETF investing in near-month WTI futures, reversed solidly higher. The catalyst was an OPEC statement tied to a potential output freeze when major world oil producers meet in Algiers next week. Crude prices were gutted in the past year as worries about the oil glut and global growth mounted. SPDR Gold Shares (GLD) recovered Tuesday from an early loss, helped by lower odds of a September rate hike. The commodity ETF tracks the price of gold. 12 BELLWETHER ETFS Here's how major exchange traded funds across major asset classes performed today, with IBD Relative Strength Ratings. The RS Rating is a measure of a stock's price performance over the last 12 months, compared with all stocks and ETFs, on a scale of 1 to a best-possible 99. Following daily ETF market action can be key to successful investing: SPDR S&P 500 (SPY), 0%, RS 54 POWERSHARES QQQ (QQQ), +0.2%, RS 65 SPDR DOW JONES INDUSTRIAL AVERAGE (DIA), 0%, RS 50 ISHARES CORE S&P MID-CAP (IJH), -0.5%, RS 59 ISHARES RUSSELL 2000 (IWM), -0.4%, RS 65 ISHARES MSCI EAFE (EFA), +0.6%, RS 29 VANGUARD FTSE EMERGING MARKETS (VWO), 0%, RS 68 SPDR GOLD SHARES (GLD), +0.1%, RS 68 UNITED STATES OIL (USO), +0.9%, RS 10 ISHARES CORE U.S. AGGREGATE BOND (AGG), 0%, RS 41 POWERSHARES DB U.S.$ BULLISH (UUP), +0.2%, RS 33 IPATH S&P 500 VIX SHORT-TERM FUTURES (VXX), -0.7%, RS 1

Major index ETFs finished flat Tuesday as investors shrugged off weak housing data and awaited the Federal Reserve's decision on interest rates. Biotechnology exchange traded funds


rose, and health care led advancing S&P 500 sectors. Shares of SAREPTA THERAPEUTICS (SRPT) have nearly doubled in price since Monday, to just under 56, after federal regulators approved 


the company's drug for muscular dystrophy. IShares Nasdaq Biotechnology (IBB) popped 1.4% on the STOCK MARKET TODAY. SPDR S&P Biotechnology (XBI) added 2.5% for its best level since


early January. This ETF is a play on the biotechnology sector that takes on bigger risk for potentially larger rewards. XBI gives each of 87 stocks an equal weight, or importance. So a


small-cap company like Sarepta has roughly the same stake in the portfolio as biotech giants AMGEN (AMGN) or CELGENE (CELG). By contrast, the cap-weighted IBB focuses first and foremost on


the biotech majors. More than half of its assets are tied to the top 10 holdings out of 184 stocks, including Amgen, Celgene and BIOGEN (BIIB). Third quarter to date, XBI is up 21.9% vs.


13.3% for IBB. The former also has a modest edge in terms of annual average gains over the past five and 10 years. As prices for biotech stocks have recovered, so has investor interest in


the small-cap biotech ETF, said David Mazza, head of research for SPDR ETFs. Year to date, investors have added $303 million in fresh money to XBI. "Recently, price action has been


driven by company-specific news and the influence of the U.S. presidential election," Mazza told IBD in an email. Investors should brace for the continued influence of external factors


heading into November, he cautioned. Biotech stocks are sensitive to certain remarks of a political nature. Rhetoric about price-gouging in the drug industry tends to intensify ahead of a


vote. ------------------------- IBD'S TAKE: _Sarepta's MUSCULAR DYSTROPHY DRUG faced a long and controversial march toward FDA approval, but it may mean the company's growth


story is just beginning._ ------------------------- Energy led declining S&P 500 sectors Thursday. Energy Select Sector SPDR (XLE) posted a 0.7% loss. United States Oil (USO), a


commodity ETF investing in near-month WTI futures, reversed solidly higher. The catalyst was an OPEC statement tied to a potential output freeze when major world oil producers meet in


Algiers next week. Crude prices were gutted in the past year as worries about the oil glut and global growth mounted. SPDR Gold Shares (GLD) recovered Tuesday from an early loss, helped by


lower odds of a September rate hike. The commodity ETF tracks the price of gold. 12 BELLWETHER ETFS Here's how major exchange traded funds across major asset classes performed today,


with IBD Relative Strength Ratings. The RS Rating is a measure of a stock's price performance over the last 12 months, compared with all stocks and ETFs, on a scale of 1 to a


best-possible 99. Following daily ETF market action can be key to successful investing: SPDR S&P 500 (SPY), 0%, RS 54 POWERSHARES QQQ (QQQ), +0.2%, RS 65 SPDR DOW JONES INDUSTRIAL


AVERAGE (DIA), 0%, RS 50 ISHARES CORE S&P MID-CAP (IJH), -0.5%, RS 59 ISHARES RUSSELL 2000 (IWM), -0.4%, RS 65 ISHARES MSCI EAFE (EFA), +0.6%, RS 29 VANGUARD FTSE EMERGING MARKETS (VWO),


0%, RS 68 SPDR GOLD SHARES (GLD), +0.1%, RS 68 UNITED STATES OIL (USO), +0.9%, RS 10 ISHARES CORE U.S. AGGREGATE BOND (AGG), 0%, RS 41 POWERSHARES DB U.S.$ BULLISH (UUP), +0.2%, RS 33 IPATH


S&P 500 VIX SHORT-TERM FUTURES (VXX), -0.7%, RS 1