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Thematic Growth Investment Portfolio – IB Asset Management

Mott Capital Management uses a long-term thematic growth approach to investing in equities. We search for investments that both reflect and help to shape…

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The Week Ahead: What To Watch

The most significant piece of news to kick-off the week of October 16, will be Netflix ($NFLX) which is due to report results on Monday, October 16 after the close of trading. We previewed the quarterly results in a commentary write up on October 14.

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Biotech

Using the Nasdaq Biotech ETF as a proxy ($IBB), the biotech sector has been stagnating for some time. The group has been able to catch a bid over the past couple of weeks, and we will want to see this sector begin to come back to life. The ETF is up by nearly 27 percent so far in 2017, easily outpacing the SP 500’s 14 percent, but October has been a bit of bust for the sector.

IBB data by YCharts

Over the past month, only one of the big four biotechs has beaten the SP 500, Biogen ($BIIB). Amgen ($AMGN), Gilead Science ($GILD), and Celgene ($CELG) have all underperformed the broader SP 500 and the Nasdaq Biotech ETF, IBB. Even the more evenly weighted SPDR Biotech ETF ($XBI) has seen its performance slump in recent days.

IBB data by YCharts

Is it because of a rotation or is there something more going on here? The biotechs have been one of the most influential group’s in 2017, behind the chipmakers ($SOXX). This group will need to continue to thrive for the market’s move higher to remain strong.

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The Financials

Financials have been one of the stronger sectors over the past month, but the market seems unimpressed by the latest round of results out of JP Morgan ($JPM), Bank of America ($BAC), and Citigroup ($C). With each of the stocks falling some over the past couple of days. Perhaps a rotation in the bank came at the expense of the biotech names. But if the financials continue to wane, maybe that will money will find its way back into biotech.

IBB data by YCharts

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Chips

Chips just continue to rocket higher, and they should also continue to rise. In fact, one of the worst performing chips Intel ($INTC) recently made a high not seen since 2001. Shares of the chipmaker, are up about 9.5 percent so far in 2017, underperforming the broader iShares PHLX Semiconductor ETF ($SOXX) by nearly 25 percentage points.

SOXX data by YCharts

Intel recently broke out of a nearly two-decade slumber, when it rose above $39 for the first time since 2001. It could pave the way for the eventual rise to $48.

Technology

Technology stocks just continue to rise as well, using the Technology Select Sector SPDR ($XLF) as a proxy. There have only been a few times the ETF has risen above its trading channel.

Our Chart of The Week Video: Tesla’s May Rise To $400

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Premium Content

NVIDIA Failing

Micron Seeing Heavy Options Activity

Free Content

Netflix Shares May Rise 10%, Options Show

Amazon May Rise 10% As It Breaks Above $1,000

Micron Shares Could Rally After Stock Offering

Celgene, Biogen Are Poised to Break Out: A Technical View

AMD’s Shares Could Rise 20% to $17, Option Trades Show

Why $120 Target For Visa’s Stock Is Way Too Rich

Why BofA May Outperform JPMorgan, Citigroup

How Tesla’s ‘iPhone Moment’ Paved the Way for the Model 3

Michael Kramer and the clients of Mott Capital own shares of NFLX, GOOGL, CELG

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Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.

Tags: Netflix, GE, AMD, AMZN, NFLX, HON, GOOGL, MU

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