RegMed Investors’ (RMi) closing bell; sector tanks

April 19, 2018 6:21pm

Weakness is the word of the session as the market indexes closed down

While ETFs create inefficiencies in the market; sector equities fell as ETFs get bought or sold, as opposed to trading on their own fundamentals

Remember they are a synthetic instrument, which I call a derivative

Pre-open indication results:  I abstained from pontificating rightly anticipating the resulting effects of today’s session

I had warned of resistance

End of day briefing; the “numbers” speak!

Henry’omics:

Today’s moves … big word - weakness

The advance/decline line scenario of 40 covered companies:   

• The open was positive with the A/DL to 19/18 and 3 flat;
• The mid-day continued negative with an A/DL of 14/23 and 3 flat;
• The close concluded negative with an A/DL of 9/28 and 3 flat;

From the pre-open’s newsletter, “… with the lack of news, catalyst and milestones. Eeny, meeny, miny, moe as investors are left to speculation with traders barking, algorithms ruling and ETFs pooling; it might be a good day to hide. It’s a good day for a safety check or was it sanity verification!

As I had stated, “risk in our sector is ALWAYS there however, the ‘Trump risk’ in the markets is still hard to quantify – who knows what will “infect” this market, Yet the old mantra spikes, “sticks and stones will break my bones but, names will never hurt me!”

Thursday's dip came after the S&P 500 and NASDAQ posted downside pain after Wednesday’s negative close, Tuesday’s positive close, Monday’s negative close and last Friday’s negative closes.

The sector seems tired as low volume and decreasing investor portfolio return are a constraining factor that could overshadow below estimate financial returns i.e. earnings.

ETFs own a greater portion of small companies, which could contribute to small-cap volatility

• Exchange-traded funds are among the most popular ways for investors to get exposure to nearly any asset class, region, or strategy in global financial markets. However, rather than providing safety in numbers, this could become a risk factor for some assets.
• The question of whether the massive growth in ETFs is something to be feared has been hotly debated for years, as investors increasingly adopt the investment vehicle and dump old-school alternatives like actively managed mutual funds, which typically charge more and deliver inferior long-term results.
• ETFs hold baskets of securities like mutual funds, but trade intraday like stocks. They are particularly popular for getting exposure to equities; according to FactSet, there is $2.8 trillion held in U.S.-listed stock ETFs, compared with just $605 billion for U.S.-listed fixed-income products.

Furthermore, ETFs are overwhelmingly passive products, meaning the stocks they hold are dictated by the index they track. When an investor buys a share of the ETF, they are essentially buying a fraction of each company that fund holds. <MarketWatch>

Didn’t I wrote on 4/18 and asked, “Are we coming up against major resistance?”

Feathering the sector – anomalies:

• Athersys (ATHX) was FLAT with 1.29 M shares traded after Wednesday’s +$0.05 with 1.18 M shares <3 month average = 603.6 K shares>;
• AxoGen (AXGN) closed down -$0.40 with 270.6 K shares traded <3 moth average = 331.3 K shares>.
• Histogenics (HSGX) closed down -$0.03 with 61.99 K shares traded <3 month average = 100.75 K shares <are they sure they made the right decision in appointing S. Washer, CEO of AGTC to its BOD – all she has done is depreciate her own share;
• Cesca Therapeutics (KOOL) closed down -$0.14 with 166.3 K shares traded <3 month average = 78.6 K shares> its due;

Review the 14 sessions of April’s closings (of 40 covered companies) there have been six (6) negative and six (6) positive and two (2) neutral closes:

• Thursday closed NEGATIVE with 28 decliners, 9 advancers and 3 flats;
• Wednesday closed NEGATIVE with 24 decliners, 14 advancers and 2 flat;
• Tuesday closed POSITIVE with 24 decliners, 15 advancers and 1 flat;
• Monday closed NEGATIVE with 21 decliners, 14 advancers and 5 flats;
• Friday closed barely NEGATIVE with 18 decliners, 17 advancers and 5 flats;
• Thursday closed POSITIVE with 8 decliners, 30 advancers and 2 flats;
• Wednesday closed NEUTRAL with 19 decliners, 19 advancers and 2 flats;
• Tuesday closed POSITIVE with 7 decliners, 32 advancers and 1 flats;
• Monday closed POSITIVE with 12 decliners, 23 advancers and 5 flats;
• Friday closed NEGATIVE with 32 decliners, 7 advancers and 1 flats;
• Thursday closed NEGATIVE with 25 decliners, 11 advancers and 4 flats;
• Wednesday closed POSITIVE with 11 decliners, 28 advancers and 1 flat;
• Last Tuesday closed POSITIVE with 19 decliners, 19 advancers and 2 flats;
• The previous Monday closed NEGATIVE with 9 decliners, 31 advancers and 0 flats

MY working five (5) trend lines:

… The greatest volume to the downside:  BSTG, MESO, CLBS, BLFS, HSGX and AGTC

… Upside volume was weighted to:  ISCO, OSIR, BCLI, CUR and PSTI

… Biggest $ downside:  BLUE (-$4.25), RENE.L (-$1.50), RGNX (-$1.40), CLLS (-$0.82) and XON (-$0.79)

… Best moves to the $ upside:  OSIR (+$0.40), BCLI (+$0.06), CAPR (+$0.04), VSTM (+$0.01) and ISCO (+$0.01)

… Flats: ATHX, AST and ADRO

Daily analytics:

U.S. stocks ended lower on Thursday, with consumer staples, real estate and technology shares leading the losses.

• The Dow closed 83.18 points lower at 24,664.86.
• The S&P 500 declined 0.6% to 2,693.13.
• The NASDAQ dropped 0.8% to 7,238.06.

The CBOE Volatility Index (VIX) widely considered the best gauge of fear in the market,

• Thursday traded at 15.96, up +2.31%
• Wednesday traded at 15.60, up +2.30%
• Tuesday traded at 15.25, down -1.31%
• Monday traded at 16.56, down -4.88%
• Friday traded at 17.41, down -5.84%
• Last Thursday traded at 18.49 , down -8.65 %

The iShares Russell 2000 (IWM) indicated:

• Thursday was down -0.69%
• Wednesday +0.23%
• Tuesday was up +1.08%
• Monday +0.92%
• Friday -0.52%
• Last Thursday +0.67%

The iShares NASDAQ Biotechnology (IBB) indication:

• Thursday was down -1.36%
• Wednesday +0.07%
• Tuesday was up +1.94%
• Monday -0.68%
• Friday was down -0.71%
• Last Thursday +1.32%

The count - decliners versus gainers:

……. look at the differences in decliners:

• Thursday’s decliners ranged from -0.18% <FATE -$0.02 > to -12.81% <NWBO -$0.026> in 28 equities;
• Wednesday’s decliners ranged from -0.06% <CLLS -$0.02> to -10.96% <NWBO -$0.025 > in 24 equities;
• Tuesday’s decliners ranged from -0.16% <MESO -$0.01 > to -12.60% < BLCM -$1.13> in 15 equities;
• Monday’s decliners ranged from -0.11% <BLCM -$0.01> to -9.60% <SGMO -$1.90 > in 21 equities;
• Friday’s decliners ranged from -0.48% <NWBO -$0.0011> to -8.63% <IMUC -$0.02 > in 18 equities;
• Last Thursday’s decliners ranged from -0.14% <MDXG -$0.01 > to -5.49% <RENE.L -$4.50 > in 8 equities;

Versus

… Look at the percentage’s (%) and spreads …

• Thursday’s gainers ranged from +0.25% <VSTM +$0.01 > to +5.44% < OSIR +$0.40> in 9 equities;
• Wednesday’s gainers ranged from +0.38% <BSTG (+$0.01 > to +14.01% <KOOL +$0.22 > in 14 equities;
• Tuesday’s gainers ranged from +0.21% <CLBS +$0.01 > to +9.71% <ONVO +$0.10> in 24 equities;
• Monday’s gainers ranged from +0.04% <NWBO +$0.00 > to +9.83% <RGNX +$3.40> in 14 equities;
• Friday’s gainers ranged from +0.14% <QURE +$0.04> to +9.78% <AGTC +$0.45> in 17 equities;
• Last Thursday’s gainers ranged from +0.30% <BCLI +$0.01 > to +20.29% <BLCM +$1.39 > in 30 equities;

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.