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The Biotech Sector Is in a Downward Long-Term Trend

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Long-term trend for biotech looks downward

Though most of the biotech stocks rebounded from the recent lows, the long-term trend for biotech seems to be heading downward. Within the holdings of the Health Care Select Sector SPDR ETF (XLV), out of 54 stocks, only one stock is trading above its 20-day moving average, two stocks are above their 50-day moving averages, and nine stocks above their 100-day moving averages.

 

The above graph reflects the percentage of stocks within XLV that are trading below different moving averages. In percentage terms, 98.11% of the stocks within XLV are trading below their 20-day moving averages, 96.23% are trading below their 50-day moving averages, and 86.79% of the stocks are trading below their 100-day moving averages. The fact that most of the stocks within the portfolio are trading below their moving averages indicates a long-term downward trend for biotech stocks.

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Baxter and CR Bard buck the trend

CR Bard (BCR) was trading at $193.79 as of August 31, 2015, and has been trading above the 50-day and 100-day moving averages. The stock moved up by 5.19% on the news that Goldman Sachs raised its ratings from “neutral” to “buy.”

Baxter International (BAX) went up by 3.44% on the news that it is bidding to buy Ariad to boost its cancer department. The stock closed at $38.45 as of August 31, 2015.

Eli Lilly and Company (LLY) moved up by 2.01%. The other stock that is trading above its 100-day moving average is Hospira (HSP). HSP and Cerner (CERN) are working to advance the integration of IV-EMR technology.

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