One thing I know from witnessing many market and economic events is that the stock market is resilient. I’ve seen many cycles come and go, with the markets dropping precipitously, including
September 11, 2001: Markets closed for seven days. When they reopened, the Dow lost 7.1% on the first day of trading.
The World Didn’t Collapse after Brexit
And in all these cases, the market made a strong recovery, soaring even higher. For sure, the decline following Brexit created uncertainty in the hearts and minds of investors worldwide, but the jury is still out regarding long-term repercussions from Great Britain’s exit from the European Union. And more than likely, markets will continue to take the news in stride, processing it along with other global events, including interest rate actions, unemployment gains and economic progress.
Here’s what I wrote to our Wall Street’s Best subscribers on the morning following Brexit:
And, as the following chart illustrates, the markets have, indeed, sprung back again, recovering all of those losses.
During the brief decline, investors fled to defensive industries like utilities and consumer staples, while other industries were hit hard, including financials, materials and technology. And healthcare, which had seen some decent gains in the past few months, also repelled investors.
Biotech Stocks Are Roaring Back
But yesterday, healthcare stocks outperformed every other industry, gaining +0.67%. And this morning, I’m reading lots of headlines that are very bullish on one particular healthcare sector—biotech.
John Gray, one of our contributors to Wall Street’s Best newsletters, and Editor of Investor’s Intelligence, had this to say about the industry:
“The Healthcare Bullish % was one industry showing a gain on Wednesday. The chart still has a lot of work to do in order to reverse up and therefore caution is still suggested. The probability for a deeper retracement remains high.”
After Brexit: Three Biotechs Issuing Buy Signals
But he went on to name three biotech stocks that were issuing buy signals yesterday.
Please note that these are bullish trading signals. Both EW and MRK are trading near their 52-week highs, and while CELG was up over $4 yesterday, it is still some $40+ off its yearly highs. If you are a long-term buyer, please make sure that these shares fit into your overall portfolio strategy before diving in. And as always, keep your portfolio diversified!