March 13, 2020 4:47pm
The algorithmic “rules” in electronic trading has weaponized volatility
Pre-open indications: 10 HITs < BLUE (+$1.07), GBT (+$8.49), ALNY (+$8.45), RGNX (+$1.60), IONS (+$4.08), FIXX (+$0.83), BLFS (+$0.39), RENE.L (+$1.50), VCEL (+$1.55), RARE (+$2.00)> and 1 MISS < CRSP (-$0.48)
The week in review
As the cell and gene therapy sector runs out of buyers, it runs into trouble (just like a fire that runs out of wood)
The Dow closed UP +1981.88 points (+9.35%), the S&P closed UP +248.45 points (+9.21%) while the NASDAQ closed UP +672.43 points (+9.34%)
Indexes rose +9% in volatile trading Friday to rebound from the sharp losses suffered in Thursday’s session.
All three benchmarks booked their best one-day gains since 2008. However, Friday's spectacular rally only served to highlight one of the most volatile periods in recent memory. The major benchmarks all closed the week sharply lower.
Even then, markets were bombarded with negative headlines from multiple states (example, New York state has seen coronavirus infections jump +30%), sport events and tournaments, schools and universities etc. and etc. with even more restrictions for large events and businesses being imposed.
Before the open, S&P 500 futures hit their “limit up” levels, jumping more than 5%. These limit levels act as a ceiling for buying until regular trading begins and are meant to insure orderly trading. <CNBC>
The major averages rallied to their session highs after President Trump also said 50,000 new coronavirus tests will be available next week.
While volatility has been moving in both directions!
The CBOE Volatility Index traded down -18.30 or -24.25%
The sector’s opening Advance /Decline (A/D) line was positive <22/12>, the mid-day’s A/D line turned negative <8/26> to re-spurt at 1:30 p.m. <21/14> and closed at 29/6 and 0 flat.
We all NEED to REMEMBER that this infectious disease, the coronavirus was first identified in Wuhan, China in December and has infected more than 128,000 people across more than 100 countries.
The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:
- Friday, the IBB closed up +6.34% and XBI closed up +6.44%
- Thursday, the IBB closed down -8.85% and XBI closed down -10.89%
- Wednesday, the IBB closed down -5.34% and XBI closed down -5.79%
- Tuesday, the IBB closed up +2.31% and XBI closed up +2.26%
- Monday, the IBB closed down -6.80% and XBI closed down -8.06%
The advance/decline line scenario of 35 covered companies:
- Friday, the close was positive with an A/D line of 29/6, 0 flat of 35 covered;
- Thursday, the close was negative with an A/D line of 2/33, 0 flat of 35 covered;
- Wednesday, the close was negative with an A/D line of 2/32, 1 flat of 35 covered;
- Tuesday, the close was positive with an A/D line of 24/10, 1 flat of 35 covered;
- Monday, the close was negative with an A/D line of 3/32, 0 flat of 35 covered;
Friday’s (5 lowest) decliners:
- Bellicum pharmaceuticals (BLCM -$1.05);
- Biostage (BSTG -$0.89);
- Brainstorm Cell Therapy (BCLI -$0.55);
- CRISPR Therapeutics (CRSP -$0.48);
- Caladrius Bioscience (CLBS -$0.18);
Friday’s (highest 5) incliners:
- Global Blood Therapeutics (GBT +$8.49 after Thursday’s -$8.97 and Wednesday’s -$6.89);
- Alnylam Pharmaceuticals (ALNY +$8.45 after Thursday’s -$8.77, Wednesday’s -$7.50 and Tuesday’s -$0.57);
- uniQure NV (QURE +$4.48);
- Ionis pharmaceuticals (IONS +$4.08);
- Sage Therapeutics (SAGE +$3.46 after Thursday’s -$7.61 after Wednesday’s -$3.99);
The percentage (%) indicators:
- Friday’s range of the 29-upside was +0.53% (VYGR) to +29.45% (ADVM) while the 6-downside ranged from -0.95% (AGTC) to -26.25% (BSTG);
- Thursday’s range of the 2-upside was +3.39% (ADRO) to +6.57% (PSTI) while the 33-downside ranged from -3.14% (BSTG) to -29.47% (BLFS);
- Wednesday’s range of the 2-upside was +1.25% (BLCM) to +2.94% (BSTG +$0.10) while the 32-downside ranged from -2.65% (CLBS) to -19.13% (MESO);
- Tuesday’s the range of the 24-upside was +0.27% (FIXX) to +21.04% (MESO) while the 10-downside ranged from -0.20% (STML) to -16.29% (ADRO);
- Monday’s the range of the 3-upside was +0.53% (BSTG) to +16.53% (BSTG +$0.02) while the 30-downside ranged from -3.02% (ALNY) to -22.31% (PGEN);
Upside volume stats: to compare
- Friday: 24 out of the 29-upside had higher than the 3-month average volume;
- Thursday: 1 out of the 2-upside had higher than the 3-month average volume;
- Wednesday: 0 out of the 2-upside had higher than the 3-month average volume;
- Tuesday: 11 out of the 24-upside had higher than the 3-month average volume;
- Monday: 2 out of the 3-upside had higher than the 3-month average volume;
Downside volume stats:
- Friday: 3 out of the 6-downside had higher than the 3-month average volume;
- Thursday: 26 out of the 33-downside had higher than the 3-month average volume;
- Wednesday: 20 out of the 32-downside had higher than the 3-month average volume;
- Tuesday: 5 out of the 10-downside had higher than the 3-month average volume;
- Monday: 24 out of the 32-downside had higher than the 3-month average volume;
Friday closed positive with 6 decliners, 29 advancers and 0 flat
Thursday closed negative with 33 decliners, 2 advancers and 0 flat
Wednesday closed negative with 32 decliners, 2 advancers and 1 flat
Tuesday closed positive with 10 decliners, 24 advancers and 1 flat
Monday closed negative with 32 decliners, 3 advancers and 0 flats
Friday closed negative with 29 decliners, 4 advancers and 2 flats
Thursday closed negative with 24 decliners, 11 advancers and 2 flats
Wednesday closed positive with 3 decliners, 30 advancers and 2 flats
Tuesday closed negative with 26 decliners, 7 advancers and 2 flats
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.