The iShares Nasdaq Biotechnology ETF (NasdaqGM: IBB), the largest biotech exchange traded fund by assets, is off more than 5% over the past month, bringing its year-to-date loss to just over 20%.
That is enough to put IBB in bear market territory for the year and with post-election enthusiasm for biotech stocks and ETFs faltering, some believe there are more declines on the way.
Biotechnology and pharmaceutical stocks also strengthened after the defeat of a California ballot proposal aimed at reining in the increasing prices on prescription drugs.
As a gauge of risk appetite, IBB’s chart action is worth noting for investors.
“What the biotechnology stocks do is not only important for biotech investors, but also for all stock markets. Biotech, as part of the health sector, has been a leader in recent years. Markets typically rotate their leaders and laggards. But still health and biotech are risk sensitive so stock bulls do not want this sector to break down,” according to ETF Daily News.
Bearish plays on healthcare and biotech ETFS include the recently launched Direxion Daily S&P Biotech Bear Shares (NYSEArca: LABD) takes the -3x or -300% daily performance of the biotech sector, ProShares UltraPro Short NASDAQ Biotechnology (NasdaqGM: ZBIO) also tracks the -3x or -300% daily performance of the Nasdaq Biotechnology Index, ProShares Ultrashort Nasdaq Biotechnology (NasdaqGM: BIS) tracks the -2x or -200% daily performance of the biotech space and ProShares UltraShort Health Care (NYSEArca: RXD) follows the -2x or -200% daily performance of the broader healthcare sector.