April 24, 2018 7:50am

Don’t start counting on a quick upside

 

Light trading volumes and thinning liquidity has hurt the sector

Revisiting past highs won’t be easy as any sustainability is suspect

 

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

 

Positive open expected

Dow futures are UP +0.61% (+150 points) and NASDAQ futures are UP +0.52% (+35 points)

 

U.S. stock index futures edged higher ahead of Tuesday's open

European markets were slightly higher

Asia markets were mixed in the afternoon session

 

Data docket: the Philadelphia Fed's non-manufacturing business outlook survey is scheduled to be released at 8:30 a.m. ET, followed by S&P/Case-Shiller house price index and the FHFA house price index at 9 a.m. ET. At 10 a.m. ET, new home sales, consumer confidence and the Richmond Fed Survey of Manufacturing Activity are all scheduled to be published.

 

Today’s indications:

  • The iShares Nasdaq Biotechnology (IBB) is NOT indicating in Tuesday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) is NOT indicating in Tuesday’s pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) is NOT indicating in Tuesday’s pre-open;
  • The iShares Russell 2000 (IWM) is indicating a POSITIVE +0.5% upside in Tuesday’s pre-open

 

Henry’omics:

Today’s moves:  The moves in premarket trading came as major markets overseas traded higher;  I don’t see a lot of new money … moving … into sector equities; the roller coaster of algorithms “ruling” and ETFs “re-tracking” are what the sector will be all about!

Caution is my mantra.

From Monday night’s newsletter: “… trading is very thin as the downside funnels the sector even lower.”

 

Market issues:  The S&P 500 (SPX) just recorded a dubious milestone. The SPX has been in correction territory, defined as a decline of at least 10% from a recent peak, for 52 trading sessions, including Monday’s lackluster finish for the index. The S&P 500 slipped into correction territory on 2/8/18, along with the Dow and remains there because it hasn’t set a new high above its record set 1/26/18.

  • As of Monday’s close, the SPX index is off about 7.1% from its recent peak, while the Dow is 8.2% shy of its late-January record, and the NASDAQ is off 6.1% from its recent record since 3/12/18. Since 1950, the average correction has run about 61 trading days, while the past five corrections have run about 37 trading sessions.

A re-cap:

  • There have been 16 sessions of April’s closings,  there have been nine (9) negative closes,  six (6) positive closes and one (1) neutral close (of 40 covered companies);
  • In the last six (6) sessions, the iShares NASDAQ Biotechnology (IBB) was down in four (4) and up in two (2) sessions for an aggregate of +1.33% with Monday (-0.16%), Friday (-0.88%), Thursday (-1.36), Wednesday (+0.07%), Tuesday (+1.94%) and last Monday (-0.68%);
  • Monday’s decliners ranged from -0.18% <FATE -$0.02 > to -6.05% <RGNX -$2.40 > in 28 equities;
  • Monday’s gainers ranged from +0.33% <XON +$0.06 > to +3.47% <ATHX +$0.07 > in 7 equities;

 

My evaluation:  I’d WAIT until after the first hour of the session to stick my finger in the cauldron.

 

Company in my headlights:

 

We’ve seen many new lows but, we are on the cusp of quarterly financial results i.e. LPS (loss-per-share) earnings being released identifying slow development cycles with higher operating and G&A spending.

 

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.