Biotech had a Booming Day

On January 2nd, 2017, we wrote an article predicting that January 4th, 2017, would be the day to define biotech for January. Our prediction was merely based on prior behavior of biotech stocks during the same period in prior years. Biotech stocks seem to have started off 2017 with a whimper (1/3/17 - anticipated) then a bang (1/4/17 - the day of change). How long this upward momentum will go is anyone's guess, but the potential for upward momentum in January is there. A review of prior year's performances show that biotech stocks tend to perform similar for the month of January (generally speaking) as their first week trades. Thus, it is my expectation that if we see biotech stocks continue to rise through the week, we will end January on an up note.

Time Horizon	S&P500 Performance	NASDAQ Performance	NASDAQ Biotech	iShares Nasdaq Biotech ETF	S&P Biotech Select Industry Index	Cumulative Biotech Performance
Today Delta	0.57%	0.88%	2.63%	2.59%	4.69%	3.60%

There are many biotech stocks that remain undervalued following the 2016 biotech correction. It still remains unclear if 2017 will be the year of the bear. There are, however, some positive signals for a bull market. The Federal Reserve decision to raise rates at a (likely) faster pace will likely make risk a more palatable investment option. There are general concerns about the market though. Will the DOW 20,000 benchmark be breached? If so, then what happens? Will the Trump trade (a trade on the basis that a Donald Trump presidency will be good for business) continue up to and post the president-elects inauguration? These are all questions that are currently unanswerable due to the high number of variables at work.