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When you have a diminished pool of money coming in, you have to sell something to buy something. People can't sell the cyclicals to buy tech. They can't sell the financials, as they are supposed to be bought at this stage of the cycle. And they certainly don't want to sell the retailers. Never sell your winners!

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So they are killing the drug stocks. Nah, not killing them. Laying them to waste. Crushing them like bugs on windshields. Vaporizing them. I understand that if things are getting better, you get away from more defensive names. It is why the only health care and drug name I am recommending in my Action Alert portfolio is Merck (MRK:NYSE - news - boards). I expect weakness to spread to stocks like United American Healthcare (UAHC:OTC BB - news - boards) (which I would short on a trading basis) and Cardinal Health (CAH:NYSE - news - boards).

But this too shall pass. For those who are sitting on big gains in the group, including biotech, I still think there is rough sledding ahead. You know I am negative on biotech. (I think the BBH (Merrill Biotech HOLDRs) is going to $125; it currently resides at $138.) I think it is not too late to sell biotech.

Sell stocks that are up too much, but I wouldn't sell drugs here if I owned them. Too late. Hold on.

They will come back. They generate huge cash flow and are well-managed institutions. They just get sold when managers don't have money coming in. And they don't have it coming in now.