March 26, 2018 7:38am

Politics and markets are not mixing well, while volume and volatility continue to diverge

The sector was grossly oversold by algorithms, ETFs, trading, negative sentiment and just plain old complacency by investors!

 

Time to rack-up the game … the NASDAQ’s IBB (+1.69%), XBI (+1.59%), XLV (+1.69%) and IWM (+1.49%) indicated a strong start to the sector

When the sector has been hit that many times, it’s time for a “Rocky Balboa”

 

If you had been subscribing, you’d be aware of the issues affecting the upcoming session… 

 

Higher open expected

 

Dow futures are UP +1.30% (+306 points) and NASDAQ futures are UP +1.70% (+112 points)

 

Dow set to rise more than 350 points at the open as fears of an impending trade war ease as U.S. stock index futures are posting major gains ahead of Monday's open, bouncing back from the sharp losses seen during Friday's session.

European markets edged higher on Monday morning, though lingering fears of a tit-for-tat global trade war appeared to cap gains.

Some Asian markets recovered in late-afternoon trade on Monday as news emerged that the United States agreed to exempt South Korea from steel tariffs.

 

Today’s concern: investors will be eyeing the subject over the coming days to see if trade tensions ease or become more aggravated – It seems concerns over trade tariffs alleviated somewhat – this a.m.

Data docket: the Dallas Fed's Texas Manufacturing Outlook survey is expected to come out at 10:30 a.m. ET.

 

Today’s indications:

  • The iShares Nasdaq Biotechnology (IBB) is indicating a POSITIVE +1.99% upside in Monday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) is indicating a POSITIVE +1.59% upside in Monday’s pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) is a POSITIVE +1.69% upside indicating in Monday’s pre-open;
  • The iShares Russell 2000 (IWM) is indicating a POSITIVE +1.64% upside in Monday’s pre-open

 

Henry’omics:

What to be on the look-out for … What is “game” as the sector equity’s momentum wandered …

As I had stated, “the negativity has worked to further de-stabilize the sector which has even longer time for an upside move … which could also … mean that the downtrend is coming to an end?”

Review the last 5 session’s close (of 40 covered companies):

  • Friday closed NEGATIVE with 28 decliners, 8 advancers and 4 flats;
  • Thursday closed NEGATIVE with 26 decliners, 11 advancers and 3 flats;
  • Wednesday closed NEUTRAL with 19 decliners, 19 advancers and 2 flats;
  • Tuesday closed NEGATIVE with 23 decliners, 14 advancers and 3 flats;
  • Last Monday closed NEGATIVE with 25 decliners, 14 advancers and 1 flat;

Volatility (the VIX) jumped +6.56% after Thursday’s +30.68% from Wednesday’s -3.71%, Tuesday’s -4.31% from last Monday’s +20.38% as volume continued low.

From Friday’s night’s newsletter, “… swing low, coming for to carry me down. A swing low is created when a low is lower than any other point over a given time period. The downside momentum continued adding to the steep weekly loss. As I had stated last Friday in the morning pre-open “The sector could see more pressure as the fear and emotion.”

What I am “feeling” this a.m. is a quote from Rocky Balboa aka Sylvester Stallone, “Let me tell you something you already know. The world ain't all sunshine and rainbows. It's a very mean and nasty place and I don't care how tough you are it will beat you to your knees and keep you there permanently if you let it.

A re-cap:

  • Friday’s decliners ranged from -0.09% <QURE -$0.02> to -7.89% <AST -$0.15> in 28 equities;
  • Friday’s gainers ranged from +0.55% < RENE.L +$0.50> to +4.25% <BLUE +$7.70 > in 8 equities;

Consider the iShares NASDAQ Biotechnology (IBB), the last five (5) sessions ended down -7.89% … look for the index to flip … last five (5) sessions IBB indicated:

  • Friday was down -2.63%
  • Thursday was down -2.30%
  • Wednesday was down -0.98%
  • Tuesday was up +0.02%
  • Last Monday was down -2%

 

My evaluation:

A good day to BUY … and SELL …

After high volatility, low volume and last week’s decline in the IBB should be a set-up for the mornings upside!

 

Companies in my headlights:

Twenty (20) to twenty five (25) of Friday’s Twenty-eight (28) decliners are OVERSOLD Friday’s biggest

 

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.