XAutoplay: On | Off Futures for the S&P 500 index, Nasdaq 100 and Dow Jones industrial average rose early Thursday as software and biotech stocks have become key leaders of the ongoing market rally.
Oracle (ORCL) surged overnight after its strong earnings report. During the regular session Celgene (CELG) roared into a buy zone, with Amgen (AMGN), Regeneron (REGN) and Biogen (BIIB) among peers showing bullish action.
Investors should pay attention to sector rotations, because a stock’s performance is closely tied to that of its broader industry. Stronger industry-sector performance may reflect improving business conditions for those companies. And there is a momentum shift as markets become more enamored or disenchanted with a group.
Nasdaq 100 futures rose 0.3% above fair value. Futures for the Dow industrials rose nearly 0.1% while S&P 500 index futures were fractionally higher.
Over the last five sessions, the Medical-Biomed/Biotech group has been the top performer out of IBD’s 197 industry groups, soaring 6.9%. Amgen, Regeneron, Biogen and Celgene are up more than 5% just this week, with Biogen and Regeneron up more than 10%.
Several other drug groups are big recent winners, among them the ethical drugs group, which includes Dow stock Merck (MRK). Merck rose 1.4% to 65.46 on Wednesday on a new approval for its immuno-oncology treatment Keytruda. Merck has a 66.90 conventional buy point with a 65.68 aggressive entry.
Meanwhile, IBD’s Software-Desktop group, home to Oracle, is the fourth-best industry over the past five days. The Dow’s Microsoft (MSFT), Adobe Systems (ADBE) and Red Hat (RHT) are also members. (Other software groups, including enterprise software and medical software, also have had big gains.)
Celgene leapt 5.2% to 132.83, blasting past a 127.74 buy point, holding just within the 5% chase zone. There’s a growing feeling among investors that President Trump will not crack down on drug prices, despite various comments he has made before and after the campaign.
Regeneron rose 5.4% to 522.02, further extended from a buy point and trading at its best levels since the beginning of 2016.
Amgen advanced 3.1% as it builds the right side of a base.
Biogen gained 4.7%, retaking its 200-day moving average a day after vaulting above its 50-day.
Recent Biogen spinoff Bioverativ (BIVV) edged down 0.1%, but is holding in a buy zone after Monday’s breakout. Bioverativ is on Leaderboard, IBD’s premium service highlighting a select cull of stocks, mostly growth plays in or near buy zones.
Clovis Oncology (CLVS) has skyrocketed 57% this week after reporting strong trial data, suggesting its ovarian cancer drug may get a much-wider use.
Gilead Sciences (GILD) rose 2.9% to above its 50-day line as the Hepatitis-C and HIV biotech tries to break a downtrend going back more than a year.
One good way to play the biotech boom is via ETFs, such as the SPDR S&P Biotech (XBI) and iShares Nasdaq Biotech (IBB). Both XBI and IBB broke out of consolidations this week.
Oracle reported much-stronger-than-expected earnings late Wednesday, with 3% revenue growth also edging past views. Shares of the business software giant shot up more than 10% to 51.16 in late trading. That would be a record high and well above a 47.09 buy point, though late trading doesn’t always carry over into next-day action. Still, Oracle already topped an aggressive entry of 46.17 on Wednesday, rising 1.1% to 46.33 in heavy volume.
In addition to desktop software names Microsoft, Adobe and Red Hat, which are all near long-time or all-time highs, several other business software stocks have been breaking out and hitting highs in recent months. They include cloud-based payroll software players such as Workday (WDAY), Paylocity (PCTY) and Paycom (PAYC), as well as ServiceNow (NOW), Salesforce.com (CRM) and Veeva Systems (VEEV).
Intraday Thursday, Japan’s Nikkei was little changed while China’s Shanghai composite climbed 0.8%.