February 8, 2016 7:08am

 

Not the last game of oversold conditions to be played but, I am reminded of the Abbott and Costello best-known comedy routine … “What is next to which?"

 

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Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors before the sector and markets open.   

 

 

DOW futures are DOWN -1.1% and NASDAQ futures are DOWN -1.6%

 

U.S. stock index futures pointed to a sharply lower open on Monday, as investors digest Friday's massive drop in technology stocks and look to Federal Reserve Chair Janet Yellen's testimony later this week.

·         Dow futures were down in excess of 150 points in pre-market trading. U.S. equities closed sharply lower on Fridayamid a massive drop in technology stocks and as mixed U.S. employment data raised concerns the Federal Reserve may raise rates this year.

European markets extended losses. The pan-European STOXX 600 was down 2.2%. Meanwhile, Europe's FTSEurofirst 300 also fell 2.2%, to hit its lowest level since October 2014.

Most major Asian markets remained closed for the Lunar New Year holidays. Markets in Australia and Japan rang in the year of the monkey on a slightly higher note, erasing early losses Monday.

·         Down Under, the ASX 200 erased losses of as much as 0.70% to close flat at 4,975.40, with the financial sector seeing losses of 0.50%. Japan's NIkkei 225 also retraced losses of as much as 1.50% by afternoon trade to close up 184.71 points, or 1.10%, at 17,004.30, snapping a four-session losing streak.

 

 

The stem, cell and gene therapy RegMed sector closed NEGATIVE on Friday, POSITIVE on Thursday, NEGATIVE on Wednesday and Tuesday, barely POSITIVE on last Monday.

 

Past five (5) days (of 43 covered companies):

·         Friday closed NEGATIVE with 32 decliners, 9 advancers and 3 flats;

·         Thursday closed POSITIVE with 9 decliners, 32 advancers and 2 flats;

·         Wednesday closed NEGATIVE with 22 decliners, 20 advancers and 1 flat;

·         Tuesday closed NEGATIVE with 34 decliners, 7 advancers and 2 flats;

·         Last, Monday closed POSITIVE with 19 decliners, 23 advancers and 1 flat;

 

 

The stem, cell and gene therapy regenerative medicine (SCGT&RM) sector has stampeded again to the downside and it is possible that the downtrends will continue until after the Q4 financial results unfold.

  • “Our” universe seems to reverse every other day; “my” analysis tells us to exit long positions and consider the short side until Q4 cash positions and ATM usage are defined!

Thus the contextual message – be neutral or HOLD to current investment to determine the risk profile that will offer the least downside.

  • After another volatile Friday, I would not be surprised to see stocks take aim at January's lows in the week ahead as investors also await two days of testimony from Fed Chair Yellen. One catalyst that has been temporarily removed is China, where markets are closed for the Lunar New Year and little data is expected.

 

 

You’ve made it to the office, turned on the monitor having just gotten your coffee and it hits you - what are today’s trades?  Monday’s indications:

  • I re-visit the Abbott and Costello comedy routine with the premise of the sketch is that Abbott is identifying the players on a baseball team for Costello.

The market is skewed, the sector is “discombobulated” like the burlesque sketch, which should remind us of … “What is next to which”.

 

In keeping to the parodied routine, I revise the questions and the answers to fit “our” universe’s circumstances:

·         Invest in: Who

·         Based on: What

·         When: I Don't Know

·         Which company: Why

·         What of it: Because

·         Time frame: Tomorrow

·         What’s my exit strategy: yesterday

·         How do I reprise my decision: I Don't Give a Darn

The “joke” is not just about baseball but, the premise of the sketch is that Abbott’ responses can be interpreted as non-responsive answers to Costello's questions.

 

The Bottom Line:  if I don’t see it, how can you (?) but, we all have to be here – HOLD!

 

Opinions expressed are those of the author and are subject to change, and are not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.

Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.