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Below are yearly, quarterly, and monthly seasonal breakdowns of the Nasdaq Biotech Index (NBI) from Oct 1993 to April 2004.
Though the periods of measurement differ, it's interesting to compare these charts with those of the XCI Computer/Hi-Tech Index. We've mentioned a "give and take" relationship between biotechs and hi-techs quite a few times on this website, and the relationship seems to hold up when looking at charts. The first half of a quarter is the strongest for hi-techs...weakest for biotechs. Hi-techs drift in the second half of a month...biotechs move higher.
More than other stocks, biotechs are driven by anticipation of updates that are given at various conferences. Probably the largest and most widely followed such conference would be the ASCO event that occurs every year in the middle of May. However, the conference focuses entirely on cancer drugs...it would be interesting to group biotechs into cancer and non-cancer companies and compare their seasonal performances.
Below are charts that show the yearly, quarterly, and monthly behavior of biotechs. You can see the tendency of biotechs to gain during some of the weakest months of the year for the general market...August and September. This is definitely not the behavior you see in computer stocks. Obviously, the first quarter tends to be the weakest for the group.
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Given the interest in biotechnology stocks, we offer a list of other charts that may be of interest to biotech investors. Outside of a couple major yearly conferences, there would seem to be little of a seasonal nature to drive biotechs. However, there certainly does seem to be some seasonality in investor's risk tolerance, and biotechnology stocks are nothing if not risky. At the same time, drug makers are somewhat immune to certain macroeconomic forces. We'd also point out a "give and take" relationship between volatile biotechs and semiconductors. In the end, this group of stocks has some unique characteristics that serious investors should be aware of.
The biotechs below are "pure"...we haven't included medical device makers, or large pharmaceuticals.
Potential investors should utilize our seasonal charts in conjunction with other indicators of future success. Our tests do seem to indicate that these charts can increase the likelihood of profitable trades, but these charts certainly should not be taken as the "end all and be all" of successful trading.
The yearly seasonal charts are compiled by simply averaging all historical percentage gains/losses for the first day of the year, second day of the year, etc. The quarterly and monthly charts are compiled in similar fashion, but this time we overlay the days of the quarters and months, as opposed to days of the year. The quarterly charts are particularly useful when viewed in light of quarterly earnings and dividend milestones.
Feel free to request additional charts (in moderation): khodge @ stockwarrants.com .
For more background and caveats on our charts, visit our main "seasonal charts" page.
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