BiQ: Recap for the Week Ending April 11, 2025
Welcome to the BiQ Weekly Recap #12!
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- The Active Portfolio displays a list of all companies currently included in Active Coverage, together with their outlook and ratings. These are updated at least once a week.
- The Catalyst Tracker & Events Calendar displays a quarter-by-quarter list of upcoming catalysts and a calendar of forthcoming events.
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- BiQ Community Chat
The XBI closed last Friday at 73.64, opened Monday at 71.00, and closed Friday at 74.30. It reached an intra-week high of 75.95 and a low of 66.71, an intra-week move of nearly 14%. Volatility was very high as headlines seemed to drive alternating fear and euphoria in investors' minds.
Zooming out to the one-month chart, we can see the index seemed to bounce off of the 66 level. It's difficult to say whether this is a short-term technical bounce or the beginning stages of a recovery. Until proven otherwise, I plan to remain cautious and to expect continued volatility.
Zooming out further to the five-year chart, we can see that the index bounced on high volume from the 66-ish level, almost reaching 5-year lows near 64. The RSI remains very oversold. From this perspective, I feel cautiously optimistic that the worst damage might be behind us; however, as I mentioned above, I prefer to remain cautious and hold excess liquidity until we see a confirmed uptrend.
If you managed to make it through the past two or three weeks without losing your equanimity, take a deep breath and pat yourself on the back--well done! This was one of the most challenging few weeks I can remember, bringing back memories of the Covid sell-off in early 2020. What was different this time, however, was that there was no pandemic or financial crisis; the sell-off was self-inflicted, driven mainly by political headlines, which seemed designed to drive alternating fear and euphoria with equal facility.
In volatile times like these, it's more important than ever to remember a few fundamental facts:
- The US biotech industry remains as innovative and dynamic as ever, only at much more attractive valuations than we've seen for a while.
- Despite disruptions at the FDA, I believe the agency remains committed to fostering innovation–though there may be some bumps along the way. The US biotech industry remains the envy of the world, and it's in no one's interest to change that.
- Over the long term, companies will continue to trade on fundamentals. Buying stocks when they're cheap and selling when they're expensive is still a winning strategy for long-term investors.
That said, proper risk management is critical to long-term success and to avoid the permanent destruction of capital, especially in times of increased market volatility. This means maintaining adequate liquidity reserves to remain rational and focused while others panic.
While I expect volatility may be the new normal for the foreseeable future, I am cautiously optimistic that market conditions will eventually begin to stabilize; however, I still plan to maintain a more defensive posture until there are clear signs of a trend reversal. We're not there yet, but I think we're getting closer.
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