Four weeks into the New Year and the NASDAQ Composite is on a tear, leaving all of the other indexes, including biotech, in the dust (see "Eating Dust"). The BioCentury 100 has fallen 4 percent compared to the NASDAQ's 13 percent jump, raising the question of whether some of the movement is due to rotation from biotech to tech.

Mitch Silber of Thomson Financial/Carson doesn't see biotech money rotating out of the sector. He does see money that was on the sideline rotating back into NASDAQ after the Federal Reserve Board's surprise 50 basis point reduction in the discount rate on Jan. 3. He also believes that investors are putting money into the Composite on the assumption that the Fed will institute another 50 basis point cut when it meets on Tuesday and Wednesday this week.

Although a 50 basis point cut is not a given - analyst Jim Patricelli of Deutsche Bank Alex. Brown is guessing a 25 basis point cut at best - investors may be concluding that the Fed is willing to keep the economy from tipping into a recession, making the NASDAQ safer for investing.

In any case, it also is natural for the most beaten down stocks to get a bump. The NASDAQ Composite simply may be righting itself after shedding 39 percent of its value last year, when the BioCentury 100 was adding 39 percent.

Silber, who also sees some money rotating out of the pharma space to both tech and product-oriented biotech plays, expects the biotech market will start to catch up, because it always seems to lag the NASDAQ on a run up.

Lockup watch

The good news is that the industry apparently will make it through this record month for IPO lockups relatively unscathed. The sector's 4 percent fall looks modest in light of more than 250 million shares from a dozen IPOs that became eligible for trading in the first four weeks of the year. About 56.6 million shares from six companies are slated to come off lockup in the remainder of January (see "Free at last", A12).