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Biotech / Medical : VD's Model Portfolio & Discussion Thread
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To: Jack Hartmann who wrote (7915)5/2/2000 9:26:00 AM
From: Biomaven  Read Replies (2) of 9719
 
It sure does look like the portfolio foretells the Nasdaq activity.

The relationship between the biotechs and the Nasdaq has been something I've been discussing on the Biotech Valuation thread. To summarize, since late March, there has been a remarkable correlation between the following two charts:

1. The BTK index divided by the DRG index

2. Nasdaq divided by the Dow

Prior to January, these charts have no discernable relationship.

From January through late March, the overall shape is pretty similar, but moves are not always exactly coincident.

For the period from late March and ending three days ago these two charts are essentially indistinguishable (with no discernable lead or lag).

Three days ago, the Nasdaq was a bit stronger, but for the last two days the biotech chart has been quite a bit stronger. Hence the lockstep appears to have been broken.

Interestingly, looking back to the biotech/drug peak on March 7, this appears to have lead the Nasdaq/Dow peak by about a week. So maybe the biotechs in the present environment are in fact some sort of leading indicator.

I'm not claiming these charts have any predictive value - but I think they do help me understand what's been moving the biotech market.

Peter
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