August 27, 2019 8:46am
Only two seats on the fulcrum, one for up and one for down
Today’s theme, monitor and stay balanced
It's a daunting task to understand risk, seeing the unforeseen; on the basis of my own “rules”, I set-up my own “warning analysis” which isn’t machine oriented!
I make a commitment to provide need-to-know “facts in evidence” as equity’s volatility is one tactical signal for stocks.
Dow futures are UP +0.30% (+78 points), S&P futures are UP +0.31% (+9 points) and NASDAQ futures are UP +0.46% (+35 points)
Futures are slightly on the upside of the curve as US keeps an eye on US-China trade “issues”;
European stocks rise as China considers relaxing auto restrictions while the European STOXX erased early gains to climb +0.02%
Asia Pacific equities edged up as investors watched closely for developments on the U.S.-China trade war following a recent escalation. Overall, the MSCI Asia ex-Japan index rose 0.26%
Data docket: S&P/Case-Shiller Home Price data is due at 2:00 p.m. ET.
A wait and see session, if it opens up – sector equities will flat line, edge a bit or crash into the sand of the trading playground.
I’m looking for some upside movement for those who went down yesterday!
From Monday’s evening post, “the sector in relation to this market, optimism, hesitancy or fatalism, I’m split. Trading volumes were lower which lead to volatile moves in markets. The oversold were begging for the upside but, squeaked by after last week marked the indexes’ fourth straight weekly loss, their longest since May.”
• The NASDAQ was up +101.97 or +1.32% to 7,853.73;
• The IBB closed up +0.73% while the XBI also closed +0.96%
• The close was positive with an A/D Line of 22/20 and 1 flat and 2 acquired;
• The range of the 22 upside was +0.02% (QURE) to +19.98% (BLCM) while the 20 downside ranged from -0.20% (VYGR) to -7.08% (Lineage Cell Therapeutics formerly BioTime (NYSE MKT :BTX);
• 4 out of the 22 upside had higher than the 3 month average volume;
• 2 out of the 20 downside had higher than the 3 month average volume;
In August there has been 10 negative and 8 positive closes
Companies in my headlights – It’s your decision; I provide an idea and context:
For a second, let’s look beyond whether the US versus Chinese whispers and restart thinking about cell and gene therapy companies - we are NOT importing or exporting - yet.
The Russell 2000 RUT (+1.13%) is more and more closely following small-cap biotech.
Pharmaceuticals and biotech currently represent 9.4% of the Russell 2000, and 15.5% of the Russell 2000 Growth index RUO, +1.15% weightings. “In this light, given the large exposure that the Russell 2000 and Russell 2000 Growth now have to biotech, it is very likely that the next 10-20 year performance of these indexes vs. other indexes in the U.S. and outside the U.S. will be significantly driven by the performance of small-cap biotech”.
The seesaw says in motion like most biotech indexes put corresponding to the volatility of the Russell 2000 and the S&P 500. Some of the weak performers fall out of the index when rebalancing occurs, while the better performers grow out of the index into the S&P 500. Investors still …. DON’T have plenty of cash available for buying into small-cap biotech after they have been … ravaged. It’s NOT for the faint hearted
Take advantage of this shift into biotechs and buy the ones expected to be added to the Russell 2000—the average annual return of buying new entrants in the six months before inclusion is 53%.
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.