Biotech: FBT (etf)...run-up, breakout...now what?1
In addition to taking individual positions in biotech co's, usually after meeting management in NDRs, I also play the sector using ETFs, sometimes XBI and IBB, and sometimes FBT.
The equal dollar weighting of FBT to match the underlying index diversifies the portfolio relative to a market-cap etf that would have more eggs in the bigger names w/large caps.
The downtrend since '21 was finally snapped with the run-up since the late Sept low, with momentum strong. Given today's (and recent) equity market weakness a la the Fed's hawkishness, FBT appears to be rolling over a bit, if not, at least facing some negative divergence.
I'm watching for how much of a roll we see with the idea of buying on more of a dip. Recall, I'm generally bearish overall in equities, but valuations in the biotech space have been so beaten down that we've finally started to see more activity in M&A and private-equity involvement. There appears to be appetite in the space, but caution to match. Higher rates and inflation generally will weigh on the space, but I'd expect to see 'big fish' continue to swallow 'smaller fish', and, for 'smaller fish' to access capital directly from 'larger fish' and to try to do it without diluting existing shareholders too much.
As always, this is NOT advice in any way, just food for thought and discussion.
Comments welcome.
The equal dollar weighting of FBT to match the underlying index diversifies the portfolio relative to a market-cap etf that would have more eggs in the bigger names w/large caps.
The downtrend since '21 was finally snapped with the run-up since the late Sept low, with momentum strong. Given today's (and recent) equity market weakness a la the Fed's hawkishness, FBT appears to be rolling over a bit, if not, at least facing some negative divergence.
I'm watching for how much of a roll we see with the idea of buying on more of a dip. Recall, I'm generally bearish overall in equities, but valuations in the biotech space have been so beaten down that we've finally started to see more activity in M&A and private-equity involvement. There appears to be appetite in the space, but caution to match. Higher rates and inflation generally will weigh on the space, but I'd expect to see 'big fish' continue to swallow 'smaller fish', and, for 'smaller fish' to access capital directly from 'larger fish' and to try to do it without diluting existing shareholders too much.
As always, this is NOT advice in any way, just food for thought and discussion.
Comments welcome.