Is The Market On Drugs?

Disappointing earnings from Citgroup C, solid earnings from Goldman Sachs GS but signs of industry weakness, punk guidance from Best Buy BBY, JC Penney JCP closing stores, oils stocks weak and the market is not crashing.

Hard to explain, the market must be on drugs.

Indeed it is, much of the green on the board can attributed to the health care/drug sector. For a variety of reasons, this sector is saving the market from a total collapse.

Leading the way is Gilead Sciences GILD, breaking to new all-time highs with no news hitting the wires. The reason for the move, a good old fashioned technical break out.

The issue, whose upward momentum had been capped at the 75.50 level over the last month by large institutional sellers, was taken out. Gilead, which posted its all time highest close on Tuesday (75.23) took early aim at the sellers off Wednesday's open and never looked back.

After cleaning out the remainder of the offers at 75.50, the issue has not found any willing sellers in the 76 or 77 handles. At this time, it has even cleared the 78 level and is now sailing through the 78 handle.

While Gilead is moving on no news, Sarepta Therapeutics SRPT has a catalyst. After the close on Wednesday, the company announced that Etepilirisen (which treats Duchenne Muscular Dystrophy) has demonstrated continued stability in its Phase IIb study.

The issue, which had been punished on November 12 (falling from 36.56 to 13.13) has now recovered over half of its losses from that disastrous session. The catalyst for the decline on that day, the FDA had reversed its view on Etepilirisen after its FDA filing.

Following the FDA announcement, Wall Street analysts jumped on the bandwagon and drastically slashed their target prices for the volatile issue. This took place despite the company publicly stating that the drug will eventually be approved.

After bottoming on November 13 at 12.12 (23 cents below the panic low on November 12), the issue began to drift upward. Perhaps investors paid attention to the Cowen analyst who defended the issue as well as the Wedbush analyst who maintained his Buy rating but lowered his target from 60.00 to 45.00.

Another issue in the health care/drug sector is Eli Lilly LLY, which is trading higher by nearly one point. The move in this issue may be a delayed reaction to the January 13 announcement that the company had acquired the all development rights for CGRP, an antibody for migraine prevention from Arteaus Therapeutics.

Eli Lilly, which in the midst of a six day winning streak is now trading at 54.33. This being the highest for the issue since September 18 when it peaked at 54.25 before nosediving to 47.53. Eli Lilly would need to rally another two points to reach its all time high of 58.40.

Another lesser-known drug stock, Alimera Sciences ALIM trading at 6.57, is returning to levels it has not seen since November 2011. The company, which specializes in R&D, treatment for certain eye diseases has gained nearly 40% in 2014.

One aspect of this bull market that is hard to ignore is that if there is weakness in one or two sectors, there is always a few others that pick up the slack. In Thursday's trading health care/drugs have come to rescue. Just what the doctor ordered for a continuation in the greatest bull market of all time.

This story was written by Joel Elconin.