Last week, we had a rash of tech earnings that dominated the release calendar – highlighted by META Platforms Inc. (META) and Amazon.com Inc. (AMZN).

This week, biotech will take center stage – with names like Vertex Pharmaceuticals Inc. (VRTX), Amgen Inc. (AMGN), Eli Lilly & Co. (LLY), and Gilead Sciences Inc. (GILD) set to report.

Could this offer you a trigger catalyst to play a name such as VanEck Biotech ETF (BBH), which has their top three holdings as Amgen, Vertex, and Gilead?

Here’s why I believe the answer is “Yes”…

Last year, the entire biotech sector was a major laggard.

For instance, look at these returns….

Biotech: Major Laggard in 2023

• SPDR S&P Biotech ETF (XBI) gained only +7.6% in 2023
• iShares Biotechnology ETF (IBB) gained only +3.8% in 2023
• SPDR S&P Pharmaceuticals ETF (XPH) gained only +1.6% in 2023

As you can see, all of these top biotech funds severely underperformed the S&P 500’s gain of +24%. Why?

Fed Rate Hikes

Since so many biotech firms borrow capital for research and development – when the Fed is aggressively raising rates – money gets expensive – and cash-burning biotech companies get crushed.

But guess what?

Here in 2024, we’re expecting Fed rate cuts.

This could be the trigger for biotech to bounce back hard.

After a year of under-performance, the VanEck Biotech ETF BBH is now starting to poke above $168. If this can continue, and it stays above this year-long resistance level – that could be an early indication that higher prices are coming.

YOUR ACTION PLAN

Now that we’re entering into a Fed rate-cutting cycle here in 2024, this could offer biotech the time to shine. And with a series of high-profile earnings reports scheduled for this week, now could be the time to start that upside swing. After an under-performance in 2023, I fully expect a stronger 2024 – which is why I’m already starting to get my War Room traders positioned for a big biotech year.

If you’d like to join us inside The War Room to trade this biotech resurgence, you’re invited to join our elite trading community.

Yes! Tell Me More About The War Room

MONDAY MARKET MINUTE

• Another Potential Oil Price Shock: If you connect the 2019 news flow with what’s happening now, then it’s reasonable to say another big price change is possible. Here’s the logic….
• Oil prices tend to trade with a “risk premium” – which increases or decreases based on geo-political uncertainty. Back in 2019, Iranian- backed forces attacked assets in the Persian Gulf, which impacted more than half of Saudi Arabia’s production. This singular event caused oil prices to spike 10% in one day. If you look at what’s happening right now, it appears like a similar playbook is playing out just like it did in 2019. Tracking.
• Running with the Deerevil: Caterpillar (NYSE: CAT) shares are indicated to hit an all-time high this morning after profits topped expectations – which should also be a signal that strength in John Deere (Nasdaq: DE) is coming as well. We could have a pair-trade in the works. More to come.
• Delta (NYSE: DAL) Has upside: In the midst of all the Boeing (NYSE: BA) uncertainty, it’s worth noting that Delta Airlines is the US airliner with the least exposure to Boeing aircrafts. They’re already Wall Street’s #1 airline stock, with 96% of analysts raying shares a “buy” – with the average price target around $54.00, which represents 35% upside from current levels.
• Tech Ready for the Next Level: Based on what we saw last week in the tech sector, its’ time to start looking at the next evolution in the technology arch – which leads to GitLab (Nasdaq: GTLB) and Snowflake (NYSE: SNOW). GTLB provides tools to coders – which is critical as AI advances at such a rapid pace. Snowflake is a leading cloud-based data platform – and both names will (in my view) lead the charge for tech going forward. Both names are ones to watch here in early 2024.