March 2, 2020 4:51pm
Weakness is being bought into, with fundamentals having been overwhelmed by panic which as I have stated was an after-decline response
The question will be pricing sustainability as those same electronic trading machines and algorithms “rule” against and strip the upside
6 HITs <BLUE (+$1.51), RENE.L (-$11.00)> SOLD into STRENGTH <FATE (+$1.81), SAGE ($+6.36), VSTM (+$0.11) and BSTG (+$0.09) and 1 MISS <SGMO (-$0.03)>
I make a commitment to provide need-to-know “facts in evidence” as equity’s volatility is one tactical signal for stocks.
The Dow closed UP +1293.96 points (+5.10%), the S&P closed UP +136.01 points (+4.60%) while the NASDAQ closed UP +384.80 points (+4.49%)
Indexes rose sharply on Monday in volatile trading as stocks attempted to pare losses incurred during the worst week since the financial crisis amid fears of the coronavirus outbreak.
Sentiment has taken a toll by the virus emanating from China, the epicenter of the outbreak.
As I stated this a.m. in my Data Docket, “A private survey on Chinese manufacturing activity released during Asian trading hours on Monday came in at its weakest level ever. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) came in at 40.3 for February, far below expectations of a reading of 45.7. PMI readings above 50 indicate expansion, while those below that level signify a contraction.”
What does it mean or show, the extent of which an outbreak can affect on stock pricing until its contained – just another level of uncertainty.
Again, the outlook is uncertain, or rather certainly bearish in the near-term as quarantining spreads around the world, but short-term the U.S. markets are bouncing back as individual outbreaks occur in various cities with considerable doubt as to where the infection came from, the duration and number of infections to follow.
That upside came today and some part of Friday marked by fast and furious selling of everything … last week.
New month, a serious reverse became evedent if the deeply oversold conditions didn’t exist… watch out for the upside aftermaths!
The virus’ quick spread has also raised expectations for easier monetary policy from global central banks, including the Fed.
One of my most followed quotes, “You have to hedge your money against a crash”, “Dr. Doom” i.e. Nouriel Roubini my favorite contrarian stated adding that his motto is “Better safe than sorry!”
- Markets aside, Roubini believes there will be huge political ramifications, especially if/when the coronavirus blows up in the United States. “You can’t build a wall in the sky,” he said. “I live in New York City and people there are hardly going to restaurants, cinemas or theaters, even though nobody there has been infected by the virus thus far. If it comes, we are totally f***ed.”
- And that is as far as I agree with having bought all his books and yellow marked the pages! I also lived once in New York City, it S***ed” – I needed green grass and not concrete.
I’ m WAITING for the NEXT BOTTOM, we are NOT DONE yet!
Again, from my a.m. “Data Docket”, “Data out of the U.S. was also lackluster. The ISM manufacturing index fell to 50.1 in February, the lowest level since the end of 2019. It also came below an estimate of 50.8.”
I am also ... RE-SHORTING an number of companies; some fundmentals and UPSIDES are READY to be DISRUPTED!
Staying in Monday, Friday, Thursday’s, Wednesday, Tuesday and Monday’s pricing doghouse was:
- Regenxbio (RGNX);
Breaking out of the pricing decline were:
- blue bird bio (BLUE +$0.63 after Friday’s +$5.55);
- Global Blood Therapeutics (GBT +$0.76 after Friday’s+$2.81);
The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:
- Monday, the IBB closed up +5.54% and XBI closed up +3.52%
- Friday the IBB closed UP +0.45% and XBI closed UP +1.73%
The advance/decline line scenario of 35 covered companies:
- Monday, the close was positive with an A/D line of 24/11, 0 flat of 35 covered;
- Friday, the close was positive with an A/D line of 22/12, 1 flat of 35 covered;
Monday’s (low 5) Decliners:
- ReNeuron (RENE.L -$11.00 after Friday’s -$7.50);
- Alnylam Pharmaceuticals (ALNY -$2.88 after Friday’s +$5.17);
- AxoGen (AXGN -$0.50 after Friday’s -$0.50);
- Caladrius Biosciences (CLBS -$0.20);
- Solid biosciences (SLDB -$0.14);
Monday’s (high 5) Incliners:
- Sage Therapeutics (SAGE +$6.36 after Friday’s -$5.01 and Thursday’s -$11.64);
- uniQure (QURE +$2.91);
- Global Blood Therapeutics (GBT +$2.25 after Friday’s +$2.81);
- Fate Therapeutics (FATE +$1.81);
- Ionis Pharmaceuticals SAGE +$1.52 after Friday’s -$5.01);
The percentage (%) indicators:
- Monday’s the range of the 24-upside was +1.6% (ATHX) to +13.53% (SAGE) while the 11-downside ranged from -0.327% (ADRO) to -8.30% (RENE.L);
- Friday’s range of the 22-upside was +0.79% (CLBS) to +46.07% (VSTM) while the 12-downside ranged from -0.68% (QURE) to -11.25% (MESO);
Upside volume stats: to compare
- Monday: 12 out of the 24-upside had higher than the 3-month average volume;
- Friday: 16 out of the 22-upside had higher than the 3-month average volume;
Downside volume stats:
- Monday: 6 out of the 11-downside had higher than the 3-month average volume;
- Friday: 10 out of the 12-downside had higher than the 3-month average volume;
0 flat -
Monday closed positive with 11 decliners, 24 advancers and 0 flats
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.