Skip to main content

The biotech sector has several periods of seasonal strength during the year, including the current period from mid-October to the first week in January. What are prospects this year?

The Biotech sector has a history of moving higher in anticipation of major conferences where biotech companies have an opportunity to announce results of research on new biotech products and services. The next major conference is the Biotech Showcase 2013 held in San Francisco for three days starting Jan. 7. The event is described as "one of the largest health-care conferences that attracts investors and biopharmaceutical executives from around the world."

This year, favourable seasonal influences in anticipation of the San Francisco conference occurred later than usual. The AMEX Biotechnology Index at 1,520.20 bottomed at the end of October at 1,391.58. Intermediate trend turned up last week on a break above resistance at 1,478.96. Next resistance is at its all-time high at 1,623.59.

Story continues below advertisement

Last week the Index moved above its 20-, 50- and 200-day moving averages. Short-term momentum indicators are trending up. Strength relative to the S&P 500 index turned positive at the end of October. Accumulation at current or lower levels is favoured for a seasonal trade lasting at least until early January.

The preferred way to invest in the sector is through an exchange traded fund that holds a diversified basket of securities. Individual equities in the sector are notorious for their high risk/high potential return profiles. A basket of securities reduces individual security risk.

Several exchange traded funds are available on U.S. exchanges. The most actively traded ETF is Biotech iShares. Units track the NASDAQ Biotech Index consisting of 121 equities in the sector listed on the Nasdaq. Largest holdings are Regeneron Pharmaceutical, Amgen, Gilead, Alexion Pharmaceutical, Celgene and Biogen. Management expense ratio is 0.48 per cent. Other less actively traded ETFs include Biotech SPDR, Market Vectors Biotech and First Trust AMEX Biotech.

Don Vialoux is the author of free daily reports on equity markets, sectors, commodities and Exchange Traded Funds. He is also a research analyst at Horizons Investment Management, offering research on Horizons Seasonal Rotation ETF (HAC-T). All of the views expressed herein are his personal views although they may be reflected in positions or transactions in the various client portfolios managed by Horizons Investment. Horizons Investment is the investment manager for the Horizons family of ETFs. Daily reports are available athttp://www.timingthemarket.ca/

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter