April 13, 2018 8:19am

What’s steering sector equities through the volatility as the algorithms are about to rule as if they never stopped?

I believe a sell-off could be in the “cards”

 

The iShares Nasdaq Biotechnology (IBB) is indicating a downside of -0.2% after Thursday’s +1.32%, Wednesday’s -0.35%, Tuesday’s +2.82% following Monday’s +1.82%

 

Pre-open indication:  7 SELLs

 

Where the understanding of the indications shed light on share pricing!

Higher to mixed open expected

Dow futures are UP +0.34% (+84 points) and NASDAQ futures are UP +0.26% (+18 points)

 

US futures mostly higher ahead of the open

European markets slightly higher

Asian stocks mostly gain as trade and geopolitical worries ebb

 

Data docket:  consumer sentiment and the job openings and labor turnover survey (JOLTS) are both due out at 10 a.m. ET. Meanwhile, three officials from the U.S. Federal Reserve are due to deliver remarks at separate events.

Political front: The list gets longer everyday …

 

Today’s indications:

  • The iShares Nasdaq Biotechnology (IBB) is indicating a NEGATIVE -0.02% downside in Friday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) is a POSITIVE +0.33% upside indicating in Friday’s pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) is NOT indicating in Friday’s pre-open;
  • The iShares Russell 2000 (IWM) is indicating a POSITIVE +0.14% upside in Friday’s pre-open

 

Henry’omics:

Today – There is trepidation with futures swaying between small gains and losses; investors are waiting and watching for developments in the U.S.-China trade spat and military action against Syria.

From Thursday night’s newsletter: “the force was with the sector after positive momentum and lessened negative sentiment with the value battle trumped by momentum defined the upside. However, I’m still waiting for downside bugles to trumpet change.”

As I had stated, “For those who have invested in the sector and stayed … after all the volatility of the advance/decline lines; we have been harmed by most (versus many) session’s action since 1/2/18. The key for investors staying in the sector’s understanding that SELLING into STRENGTH and coming back after (always looming) pricing depressions.”

Sector equities are hitting new-highs during this weekly period which to me casts uncertainty on Friday’s market. With all the politics, social media issues and geopolitical concerns – sooner rather than later I expect anything to happen.

I have been more than worried that a correction will, not would or could happen; given what we've seen over the last few months!

 It’s always a question of taking an advantage before the FALL!

 

Review the last 9 session’s close (of 40 covered companies), there have been four (4) negative and  positive closes with two (2) neutral – a split decision but, can we trust there won’t be a market “event”:

  • Thursday closed POSITIVE with 8 decliners, 30 advancers and 2 flats;
  • Wednesday (3/11) closed NEUTRAL with 19 decliners, 19 advancers and 2 flats;
  • Tuesday closed POSITIVE with 7 advancers, 32 advancers and 1 flat;
  • Monday closed POSITIVE with 12 decliners, 23 advancers and 5 flats;
  • Last Friday (3/6) closed NEGATIVE with 32 decliners, 7 advancers and 1 flat;
  • Thursday closed NEGATIVE with 25 decliners, 11 advancers and 4 flats;
  • Wednesday closed POSITIVE with 11 decliners, 28 advancers and 1 flat;
  • Tuesday closed NEUTRAL with 19 decliners, 19 advancers and 2 flats;
  • The previous Monday (3/1) closed NEGATIVE with 31 decliners, 9 advancers and 0 flats;

 

A re-cap:

  • Thursday’s decliners ranged from -0.14% <MDXG -$0.01 > to -5.49% <RENE.L -$4.50 > in 8 equities;
  • Thursday’s gainers ranged from +0.30% <BCLI +$0.01 > to +20.29% <BLCM +$1.39 > in 30 equities;

 

Consider the iShares NASDAQ Biotechnology (IBB) over the last nine (9) sessions was up +2.4%: I still see a DECLINE …

  • Thursday was up +1.32%
  • Wednesday (3/11) was down -0.35%
  • Tuesday was up +2.75%
  • Monday was up +1.82%
  • Friday (3/6) was down -3.01%
  • Thursday was down -1.62%
  • Wednesday +2.91%
  • Tuesday +0.37%
  • The previous Monday (3/2) -3.95%

 

My evaluation:  I am a skeptic today;  protecting any upside by selling into strength and it is  ... Friday, the 13th ...

 

Company in my headlights:

Applied Genetic Technologies (AGTC) closed up +$0.60 to $4.60 with 220.6 K shares traded <3 month average = 106.2 K shares>. AGTC had completed enrollment in a clinical study for the treatment of x-linked retinoschisis (XLRS). The real issue is do they have the infrastructure to oversee the trials? I say NO! The aftermarket indication is a NEGATIVE -$0.19 or -4.15% - SELL;

Bellicum Pharmaceuticals (BLCM) closed up +$1.39 to $8.24 with 8.65 M shares traded <3 month average = 868.1 K shares> after Wednesday’s +$0.10 to $6.85 with 439.6 K shares traded. The FDA lifted the clinical hold on studies of BPX-501 in the U.S. The FDA clinical hold did not affect the BP-004 registrational trial in Europe, which is fully enrolled. However, the market is ruled through algorithms in a capricious sector. The aftermarket indication is a NEGATIVE -$0.07 or -0.85%. In five (5) sessions, there is a $1.85 or +22.45% premium – BUY to SELL;

Biostage (BSTG) closed flat at $2.60 Thursday and Wednesday after Tuesday’s -$0.01 to $2.60 with 1.65 K shares traded <3 month average = 9.24 K shares> after Monday’s +$0.19 to $2.61 with 2.2 K shares traded. KPMG, their accounting firm has dropped their accounting overview – over an on-going concern issue (?) just another reason on top of many to exit this equity after the MANY misdeeds of creating a $47 M deficit over three (3) years with NO significant results; other than a whole new development target. There are JUST TOO MANY transparency issues. The Boston Business Journal did an article of BSTG’s terminal death suit; even if they are covered by insurance, there will be huge legal costs to keep the deposition doors open – Maintaining SELL;

bluebird bio (BLUE) closed up +$3.35 to $177.70 with 551.4 K shares traded <3 month average = 898.8 K shares>. I am still a profit taker as BLUE has nothing new as to catalysts or milestones to keep it at these lofty levels. In five (5) sessions, there is a $15.00 or +8.4% premium in the share price – SELL;

Intrexon (XON) closed up +$0.81 to $19.87 with 1.857 M shares traded <3 month average = 1.76 M shares>. After five (5) sessions, there is a $2.77 or +13.9% premium and in nine (9) session a $4.78 or +24% in the shares with NO news or recent milestones. With strength in this market, there is pricing vulnerability – SELL;

uniQuire (QURE) closed up +$0.30 to $29.31 with 282.7 K shares traded <3 month average = 378.9 K shares> after Wednesday’s +$1.98 to $29.01 with 597.5 K shares traded.  QURE which has a therapy for hemophilia B and a treatment for Huntington’s disease has risen 370% in the past year and has more than fully recovered from the drop following its earnings announcement on 3/14. Momentum is telling. The aftermarket indication is a POSITIVE +$0.19 or +0.65% with 2743 shares sold - SELL;

Verastem (VSTM) closed up +$0.30 to $4.07 with 3.9 M shares traded <3 month average = 734.4 K shares>. The aftermarket indication is a POSITIVE +$0.07 or +1.72%. In the last five (5) sessions, VSTM has a premium of $1.11 or +27.02%; after all that volume – I’d exit into strength even if I left money on the table– SELL;

 

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.