March 28, 2018 8:15am

A fast re-entry to the sector as the month and quarter ending in a shortened week

 

The IBB is indicating a POSITIVE +0.93% upside in Wednesday’s pre-market with the XBI (+0.94%), IWM (+0.39%) while the XLV (-0.07%) is still on the down low

A reversal from the initial indications

 

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

 

Higher open expected

 

Dow futures are UP +0.20% (+47 points) and NASDAQ futures are UP +0.03% (+3 points)

 

U.S. stock index futures rose ahead of Wednesday's open as investors tried to rebound from sharp losses seen in the previous session.

European markets fall amid tech stock sell-off; Shire shares surge 18%

  • Shire surged to the top of the index despite a Tokyo court rejecting the pharmaceutical giant's claim against a rival group's drug. A Japanese court ruled Shire's claim against Roche's new Hemlibra hemophilia medicine should be dismissed on Wednesday. The decision is thought to help clear up any legal uncertainty over the prospective blockbuster medicine. Shares of Shire were up 18% on the news.

Asian stocks closed lower after U.S. stocks fell sharply on the back of declines in technology names.

 

Today’s concern: will the sector reverse its trend as the downside power drove sentiment to some pretty low depths over concerns over social media influences

Data docket:  7 a.m. ET, mortgage applications are due, followed by the third reading of the fourth-quarter's gross domestic product (GDP) and advanced economic indicators — both of which are due out at 8:30 a.m. ET. Meantime at 10 a.m. ET, pending home sales are scheduled to be announced.

 

Today’s indications:

The iShares Nasdaq Biotechnology (IBB) is indicating a POSITIVE +0.93% upside in Wednesday’s pre-market;

The SPDR S&P Biotech ETF (XBI) is also indicating a POSITIVE +0.94% upside in Wednesday’s pre-market;

The Health Care Select Sector SPDR ETF (XLV) is indicating a NEGATIVE -0.07% downside in Wednesday’s pre-open;

The iShares Russell 2000 (IWM) is indicating a POSITIVE +0.39% upside in Wednesday’s pre-open

 

Henry’omics:

What to be on the look-out for … I am STILL watching the direction of the IBB as a reflection of the stem, cell and gene therapy, regenerative medicine “arena”.

As I had stated, “The sector is telling a story of testing lows with downside volatility thriving.”

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

  • Tuesday closed NEGATIVE with 35 decliners, 2 advancers and 3 flat;
  • Monday closed POSITIVE with 17 decliners, 21 advancers and 2 flats;
  • Friday closed NEGATIVE with 28 decliners, 8 advancers and 4 flats;
  • Thursday closed NEGATIVE with 26 decliners, 11 advancers and 3 flats;
  • Last Wednesday closed NEUTRAL with 19 decliners, 19 advancers and 2 flats;

 

Volatility (the VIX) is still a big driver having been up (Tuesday) +6.99% on Monday dropped -15.44% yesterday after jumping Friday +6.56%,  Thursday’s +30.68% and last Wednesday’s -3.71 as volume continued low.

 

From Tuesday’s night’s newsletter, “… hammered and an all but a clean sweep of the sector. The sector’s lows reflect its deepest depth which I haven’t seen in the longest time while only Histogenics (HSGX +$0.01) and Stemline (STML +$0.15) were up with 3 flats of 40 covered.”

 

What I am “feeling” and seeing this a.m.:

My "gut instinct" is to an upside play … which is backed up by the science of “sensitivity to “interoceptive” signals to make money during periods of extreme uncertainty is racking my brain, one moment I believe the oversold will be vindicated and the other is caution re a quick recovery of the undervalued!

  • Interoception’s definition is about heightened sensitivity which includes the features of attention, detection, magnitude, discrimination, accuracy, sensibility, and self-reporting.

A re-cap:

  • Tuesday’s decliners ranged from -1.01% <MESO -$0.06 > to -15.74% <SGMO -$3.55 > in 35 equities;
  • Tuesday’s gainers ranged from +0.36% <HSGX +$0.01 > to +0.66% <STML +$0.10 > in 2 equities;

Consider the iShares NASDAQ Biotechnology (IBB), the last seven (7) sessions is still down -8.08% … look for the index to flip and flop:

  • Tuesday was down -2.77%
  • Monday was up +2.68%...
  • 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%

Is this trend about to be our friend …YES

 

My evaluation:

The sector got its “clock cleaned” yesterday leaving many sector equities flopping on the shore waiting for the next tide to take them back to deep water! An analogy but, an incoming tide will also clean the debris from the shore!

Watch for momentum at the open …

 

Companies in my headlights:

… Algorithms should be on our side for once!!

 

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.