March 4, 2018 11:11am
The IBB, XBI, XLV and IWM rode the merry-go-round while the VIX turns on the whirling tea cup rides
Wham, bam and thank you algorithms for creating Friday’s climb of pricing’s hillside after creating the chasms of February’s past depreciation
Start worrying about the remainder of Q4 and FY17 result reverberations: spending, cash positions and pricing movements
Read more because … unless you know what happened last month and the start of March; it is hard to formulate a perspective for the coming weeks!
I answer one question, in which company should investors commit and keep their money.
As of Friday, equities fell for the week on concerns that a rise in US protectionism could intensify global trade tensions. Also undermining equities are fears that the Fed will raise rates four times in 2018 rather than three.
Markets closed out February to the downside marking a volatile session Wednesday (2/28), reversing their earlier gains as the “street” digested data that was seen as underlining the economy’s robust health, although that same strength could warrant the Fed’s turn to be more hawkish and increase corporate borrowing costs.
February, stocks bounced with six (6) negative closes, eleven (11) positive closes, one (1) holiday and a day off – not bad.
While January bounded with ten (10) negative closes, twelve (12) positive closes and two (2) holidays starting 2018.
Volume however was sluggish as it has been in weeks … still all over the map; which seems standard in buying yet stronger in selling – it is a gauge of how the sector feels at the moment - anxious.
All three (3) benchmarks kicked off March trade with the worst daily decline in about three weeks, with the NASDAQ breaking below its 50-day moving average at 7,173.41.
Next week’s outcome isn't cemented – I'd note that algorithms are the stone around the neck of the sector, and ongoing Q4 and FY17 results could produce adjustments or even less wide-ranging effects after the dust of last week settles.
For the week ending 3/2/17, the advance/decline analytics over 5 sessions (of 40 covered companies):
- Friday’s closed POSITIVE with 7 decliners, 30 advancers and 3 flats;
- Thursday closed NEGATIVE with 24 decliners, 14 advancers and 2 flats;
- Wednesday closed NEGATIVE with 25 decliners, 14 advancers and 1 flat;
- Tuesday closed NEGATIVE with 24 decliners, 15 advancers and 1 flat;
- Monday closed POSITIVE with 17 decliners, 20 advancers and 3 flats;
What’s making the advance/decline line ratio move up and down?
Let’s NOT forget macro and political issues as we advance through March such as the tariff issue. And the usual suspect – SENTIMENT.
The sector still hasn’t messaged its supporting metrics … appreciators are soaring one or two days to be taken down by traders every other one or two days,
Many current pricing losers are still NOT defining their positioning and “voice” which most of us – investors haven’t heard!
Q4 and FY17 results:
So far: ADRO, AGTC, AXGN, BLUE, IMUC, XON, MESO, ONVO, PSTI, SGMO, ONCE and VTGN
This coming week: CYTX, VCEL, FATE, RGNX and BLFS
Beginning 3/13: ATHX and HSGX – so far …
The week’s three finger measurement:
The CBOE Volatility Index (VIX) widely considered the best gauge of fear in the market: week’s average +9.47%
- Friday traded at 19.59, down -12.82% …
- Thursday traded 22.47, up +13.2% …
- 2/28 -Wednesday traded at 19.84, up +6.72% …
- Tuesday traded at 18.59, up +17.66% …
- Monday traded at 15.80, down -4.18% …
- Last Friday traded at 16.64, down -11.11% …
The iShares Russell 2000 (IWM) indicated: week’s average +0.22%
- Friday was up +1.57%
- Thursday -0.31%
- 2/28 -Wednesday -1.53%
- Tuesday -1.45%
- Monday +0.64%
- Last Friday +1.30%
The iShares NASDAQ Biotechnology (IBB) indicated: week average +2.76%
- Friday was up +2.44%
- Thursday -0.96%
- 2/28 - Wednesday -1.83%
- Tuesday -1.25%
- Monday +0.73%
- Last Friday +2.08%
Last week’s count - decliners versus gainers - typical of the last two (2) months:
……. look at the differences in decliners:
- Friday decliners ranged from -0.21% <CLBS -$0.01> to -3.77% <BSTG -$0.12> in 7 equities;
- Thursday’s decliners ranged from -0.02% <JUNO -$0.02> to -5.74% <CYTX -$0.0198> in 24 equities;
- 2/28 - Wednesday’s decliners ranged from -0.21% <CLBS -$0.01> to -6.41% <AXGN -$2.00> in 25 equities;
- Tuesday’s decliners ranged from -0.31% <VSTM -$0.01> to -6.01%% <SGMO -$1.50> in 24 equities;
- Monday’s decliners ranged from -0.51% <RENE.L -$0.50> to -6.13% <MDXG -$0.48> in 17 equities;
… Look at the percentage’s (%) and spreads …
- Friday’s gainers ranged from +0.14% <JUNO +$0.12> to +24.73% <XON +$3.19> in 30 equities;
- Thursday’s gainers ranged from +0.28% <MDXG +$0.02> to +16.27% <AXGN +$4.75> in 14 equities;
- 2/28 - Wednesday’s gainers ranged from +0.16% <JUNO +$0.14> to +9.63% <BSTG +$0.29> in 14 equities;
- Tuesday’s gainers ranged from +0.03% <JUNO +$0.03> to +5.84% <PSTI +$0.08> in 15 equities;
- Monday’s gainers ranged from +0.02% <JUNO +$0.02> to +17.93% <MESO +$1.11> in 20 equities;
Perspective and the week ahead: So where are we going?
After a historically weak start to the year 2018, the sector drove a road full of potholes through February. Friday, the sector ended with one of the better daily gains in months even after last week's side steps.
February was a volatile month for stocks. The major averages dipped in correction territory during the month, falling 10% from record highs set on 1/26. The move lower came as fears of rising inflation sent rates higher and sent market volatility surging after a year of unprecedented calm.
- Market caps keep getting stretched …
- Sector volatility is being caused by one overarching theme: expectation and/or the lack thereof!
- Facts and truth matter as pricing is related to transparency with guidance thrown in for effect
So where do we go from here? Looking back at stock market corrections over the past two months and a week shows three things investors could expect:
March expects volatility to remain perilous. The average daily move in the sector this February has been strong layered by debilitated and draining sentiment enhanced by feeble and scrawny volume. In the past four weeks, volatility gradually inclined after the previous year.
Sector stocks need to find footing.
There were just too many pullbacks. I think there is still life left in the sector cycle; but, multiple downdrafts are likely to emerge as we end the first quarter of FY18.
I expect stock pricing to be slightly to the downside in the weekly run sessions as recent experience has shown us and I do NOT think the sector presents an attractive opportunity.
Opinion, the shifting sands of appreciation and depreciation:
Potential come-back sector stocks: ADRO, ADVM and XON
Bouncers: FATE, AXGN, STML, QURE, RGNX, and SGMO,
Stuck in neutral: AGTC (needs clinical data), ATHX (where are results after all these years) and VSTM
Needs financing: CAPR and MESO,
Nervous on pricing: BLUE and CLLS
Undervalued – needs news: HSGX, VSTM, AST and MDXG (when the “mess” comes clear)
Going where: CLBS and VTGN
The non-gift that keeps on dipping: ONVO, FCSC and KOOL
Not surprised by ups and dips: VCEL, ATHX, OSIR and BLCM
Trading games: BCLI, CUR and NWBO
Criminals re reverses and past experience: CYTX, IMUC, OSIR and BSTG
Where news “blows” hot and cold: BLFS, PSTI and BTX
Past performance is no guarantee of future results.
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.