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Bears Had the Upper Hand on February 29: IBB Lost 2.8%

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Mar. 2 2016, Published 11:49 a.m. ET

IBB suffers loss of 2.8%

The bears had the last word in February 2016 as the markets ended the month in the red. The slowdown of the Chinese economy continued to weigh on the markets as its manufacturing sector shrank for the seventh month in a row.

The official purchasing managers’ index (or PMI) fell to 49 in February from 49.4 in January 2016. The Dow Jones Industrial Average fell by 0.7% and gained 0.3% for February. The SPDR S&P 500 ETF (SPY) remained flat during February 2016. The biotech stocks were on the receiving end, with the iShares NASDAQ Biotechnology Index ETF (IBB) falling by 2.8% on February 29, 2016.

The above table gives some insight into the iShares NASDAQ Biotechnology Index ETF, along with the top and bottom performers with respect to closing prices, returns at different periods, and moving averages.

IBB closed at $254.09 and was trading well below the 100-day and 20-day moving averages. IBB fell by 2.8% on February 29, 2016, and is down by 24.9% on a year-to-date (or YTD) basis.

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Outperformers and underperformers

OvaScience (OVAS) was the top performer within IBB on February 29, 2016, with a gain of 8.4%. The stock gained on high trading volumes of ~541,000 shares per day as compared to the five-day average trading volume of ~392,000 shares per day. OVAS closed at $5.55 and was trading below the 20-day moving average price of $6. OVAS has a book value of $4.65 per share.

With its current price, the stock is trading at a price-to-book value of ~1.2x. However, the stock has a very low weight of 0.03% in IBB’s portfolio. Merrimack Pharmaceuticals (MACK) gained 4% for the day and closed at $5.79.

On the other hand, Endo International (ENDP) fell by 21% and closed at $41.81. We’ll look into this stock in more detail in Part 2 of this series

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