December 19, 2017 8:16am

With the lack of news, there seems an over-emphasis on ETF exposure

 

Add in some algorithms mixed with some dark pools and they will suck any value out of share pricing

 

The problem is, investors don’t get a “buzz” on high frequency trading in the battle for fractions of a cent but, they do usually get screwed …

Higher open expected

Dow futures are UP +0.19% (+49 points) and NASDAQ futures are UP +0.01% (+0.75 points)

 

U.S. stock index futures are set for a positive open Tuesday, as investors get ready for a vote on a bill that would slash taxes for corporations.

Europe markets were slightly higher, on the back of a record-setting session on Wall Street amid heightened expectations U.S. lawmakers could pass sweeping tax legislation.

Asian indexes closed mostly higher after U.S. stocks finished the Monday session at record highs on optimism ahead of the passage of a key tax bill.

 

Issues that will affect the trading day: A vote by Congress is expected to occur as soon as Tuesday, with the tax overhaul hoping to slash the federal corporate tax rate from 35% to 21% - the question I whether it will pass?

Data docket: at 8:30 a.m. ET, housing starts, building permits and the current account data.

Issues on the political front: the U.S. tax plan would be passed by Christmas

 

 

Henry’omics:

From Monday night’s closing bell post, “… opens up and stays positive yet, squeaky to close positive. Many of the oversold had their day made while a few overbought clung to some upside as volume is low while volatility is haphazard.”

As I had stated, “Sector stocks closed with a high on Monday as investors eagerly waited for the oversold to realize their past value proposition.  Fear of missing out is not a good reason to avoid harvesting tax losses at year-end.”

  • High-frequency trading, an explosion in exchange-traded funds and the proliferation and even social media are behind these seismic shifts in share pricing, lately!

Algorithms battle for fractions of a cent to exploit minute movements and long-term patterns in the markets.

  • It’s like buying a stock at $1.00 and selling it at $1.0001, for example. Do this 10,000 times a second and the proceeds add up? Constantly moving into and out of securities for those tiny slivers of profit—and ending the day owning nothing—is known as high-frequency trading. <Mother Jones>

Constantly moving into and out of securities for those tiny slivers of profit—and ending the day owning nothing—is known as high-frequency trading.

  • Two manipulative ploys are: quote stuffing, the placing and quickly rescinding a large number of buy or sell orders to confuse or slow down rival traders and spread as in trading, commonly the difference between the highest price a buyer will pay and the lowest price a seller will take.

While ETFs (exchange-traded funds) blindly buy whole groups of securities or futures as easy as single stock and have garnered $65 billion of inflows this year alone, while traditional equity mutual funds haven't seen a three-month period of inflows "in years." <Nicholas Colas of ConvergEx Group>

  • This kind of trading accounts for up to 70% of volume on some days with the full support of exchanges, which allow the purveyors of this trading to have their servers to be located right next to theirs so the high speed action can take place.

 

“The Bottom Line”, I believe that social media has made great leaps in keeping information and pricing intelligence front and center having created a community of analysts on Twitter and other social networks (many of them former professionals) giving away their analysis through a pay window or for free.

And I also believe they can … disrupt these above mentioned forces!

 

 

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

The cell therapy sector’s record over 5 sessions (of 40 covered companies):

·         Monday closed POSITIVE with 17 decliners, 21 advancers and 2 flat;

·         Friday closed NEGATIVE with 19 decliners, 19 advancers and 2 flats;

·         Thursday closed NEGATIVE with 24 decliners, 13 advancers and 3 flats;

·         Wednesday closed POSITIVE with 8 decliners. 30 advancers and 2 flats;

·         Last Tuesday closed NEGATIVE with 27 decliners, 11 advancers and 2 flats;

 

 

Today’s indications:

  • The iShares Nasdaq Biotechnology (IBB) is NOT indicating Tuesday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) is NOT indicating in Tuesday’s pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) is NOT indicating in Tuesday’s pre-open;
  • The iShares Russell 2000 (IWM) is indicating a POSITIVE -0.02% in Tuesday’s pre-open

 

 

Companies in my headlights:

 

There is just NO impetus direction share price change …or news for sector stocks other than pure speculation that will dissipate any upside in a sell order!

Let’ em ride …

 

Opinions expressed are those of the author and are subject to change, and 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.  All investments are subject to risks. Investors should consider investment objectives.

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