Biotech Makes a Comeback

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So, Celgene CELG , Regeneron REGN , Biogen Idec BIIB and Alexion ALXN rested, recharged and now are returning to their winning ways. Only Gilead GILD has yet to turn to the black, which means it's probably time to buy that one, too.

These stocks had the classic kind of recharge that you want to see if you are a bull. They must be as annoying as all get out if you are a bear because all that seems to happen with them is that people pay more for the same news over and over in classic multiple-expansion theory. That's always regarded as a total red flag by the purists, but has worked just fine for ages now, so it has made all of these a tough short.

Take Regeneron, one of my absolute favorites with the best macular degeneration drug. The company reported spectacular results and then rallied, although the results were spectacular if you actually just came to believe that Regeneron isn't that good. It sure is.

Then it got added to the S&P, which caused a short spike. The usual arbitrageurs then shorted the stock, betting post admission it would give up the ghost.

But virtually at the same moment that it was added, Allergan announced, in a true shocker, that its competitive drug to Regeneron wasn't up to snuff -- yet --and that caused the next spike up. Then the market rotated to the materials stocks, which are giving up the ghost today, and the move is now back in full swing based on, well, a rotation back into these stocks as the market takes note of the pipelines and the scrips that remain strong.

That means you can go back to Biogen, which people are doing right now as the MS scrips are real good. And I suspect they will go back to Gilead, too, as there's tons of drugs in the pipeline there, too.

Just a natural change in leadership from specs and materials back to what brought us up here in the first place.

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