What Happens When Free Money Goes Away?

The market made clear this past week that macro considerations, positioning and technicals are driving near term price action as the S&P Biotechnology Select Index had its 5th best day ever on a slightly cooler than expected CPI print.

The nearly 8% up move last Thursday and subsequent follow-through led the sector solidly above the 50-, 100- and 200-day moving averages as the S&P 500 continues to languish below its 200-day moving average.

The latter despite Apple (AAPL) having the largest one-day market capitalization gain in market history of +$190 billion on last Thursday's CPI data as well.

The tail end of earnings season brought a few more beat / raise prints including one from Jazz Pharmaceuticals (JAZZ), as they continue to execute on their commercial CNS franchise, and beaten down animal health company PetIQ (PETQ) as revenues shifter to higher margin brands.

Fundamentals came squarely into view as Veru (VERU) fell 60% a negative vote from the FDA Advisory Committee reviewing sabizabulin for hospitalized COVID patients. The panel came out 8-5 against on concerns around the clinical trial integrity, relatively small sample size, possible unblinding, and unclear underlying mechanism of drug action. Seasoned biotech investors will recall VERU management's prior failed attempts to advance repurposed drugs at GTx Incorporated.

Clovis Oncology's (CLVS) warning of a possible bankruptcy filing reminded investors that achieving a drug approval and >$100 million in revenue can still be value destroying if the burn rate is left uncontrolled.

CLVS appears to be a microcosm of a world awash in free money until the tide goes out.