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Wednesday, November 01, 2006

Biotech Revisited

I first started noticing alpha in the Biotechnology (IBB 10/6/06) sector back in early-October when our analytic upgraded the derivative to a “buy” recommended status. We initially sold out of biotechnology in mid-March and watched it head south throughout the rest of the Spring and most of the Summer. However, based on the graph below, you can see that biotech is in the midst of a solid bullish trend with some ground to cover before it reaches the highs of the year.

For those of you who don’t know, the green line represents a “buy” recommendation, the red line represents a “short/sell” recommendation and the blue line represents a “neutral” recommendation.

Of the twelve biomed/genetics companies we analyze, six are “buy” recommended, while the other six are split between “neutral” and “sell” recommendations. Three of the “buy” recommended securities I’m watching closely are Medimmune Inc. (MEDI 10/27/06), PDL BioPharma Inc. (PDLI 10/6/06) and Amgen Inc. (AMGN 10/20/06).

Short-Term Technical Indicators – One of the data vendors we use is having problems this morning, so I’m unable to update my short-term technical indicators.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – The percentage of bullish advisors has edged higher again this week and is now only a shade away from the 55% level. Percentages of bullish advisors at that level often coincide with market tops, which can be viewed as a bearish indication. VIX and VXN both traded lower yesterday but remain above last week’s levels.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall investment portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Comp. Index (ONEQ 8/30/06)

Top Rated Style-Box Derivative – Morningstar Small Cap Core (JKJ 10/9/06)

Top Rated Sector Derivative – iShares Dow Jones Real Estate (IYR 6/30/06)

Today’s Top “Buy” Recommended Stocks
  • OM Group Inc. (OMG 8/11/06)
  • Allegheny Technologies Inc. (ATI 10/5/06)
  • RTI International Metals Inc. (RTI 10/11/06)
  • Harman International Industries Inc. (HAR 10/9/06)
  • Manitowoc Co. Inc (MTW 8/10/06)
  • Goldman Sachs Group Inc. (GS 9/12/06)
  • Veritas DGC Inc. (VTS 7/28/06)
  • F5 Networks Inc. (FFIV9/20/06)
  • Sears Holdings Corp. (SHLD 9/19/06)
  • Piper Jaffray Companies (PJC 10/4/2006)
Today’s Top “Sell” Recommended Stocks
  • Apollo Group Inc. (APOL 10/13/06)
  • Carbo Ceramics Inc. (CRR 2/7/06)
  • Express Scripts Inc. (ESRX 9/22/06)
  • Legg Mason Inc. (LM 10/11/06)
  • Omnicare Inc. (OCR 5/10/06)
Today’s Top “Buy’ Recommended Exchange Traded Funds
  • Internet HOLDRs (HHH 10/25/06)
  • iShares Cohen & Steers Realty Majors (ICF 6/29/06)
  • iShares MSCI Spain Index (EWP 8/4/06)
  • streetTRACKS Wilshire REIT (RWR 8/14/06)
  • iShares Dow Jones U.S. Real Estate (IYR 6/30/06)

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