March 16, 2020 6:22pm
Needed: Tighten up the bands of volatility as sentiment and confidence got flushed in the toilet
The question remains, how long will it take the market and sector to bottom out?
Q4 and FY19 earnings results: Athersys (ATHX)
As the cell and gene therapy sector runs out of buyers, it runs into trouble (just like a fire that runs out of wood). It's time to start picking up the fallen from the trash spewn from this market!
The Dow closed DOWN -2997.10 points (-12.93%), the S&P closed DOWN -324.89 points (-11.98%) while the NASDAQ closed DOWN -970.28 points (-12.32%)
Indexes fell sharply Monday even after the Fed embarked on a massive monetary stimulus campaign to curb slower economic growth amid the coronavirus outbreak.
Monday’s losses put the Dow down -31.7% from its all-time high and the S&P 500 and Nasdaq more than -29% below their records last month.
The Dow’s drop was the worst decline since its “Black Monday” crash three decades ago when it fell more than 22%. The drop surpassed its 9.99% tumble last Thursday. It was also the Dow’s third-worst day ever; it dropped more than 13% in late 1929. <CNBC>
Trading was halted for 15 minutes shortly after the open after a -8.14% drop on the S&P 500 triggered a so-called circuit breaker. It was the third (3rd) time in the last week a circuit breaker was triggered. Before the open, futures contracts tied to the major averages hit their “limit down” levels.
From my Data Docket, manufacturing activity across the New York region plunged in March as the New York Fed’s monthly Empire manufacturing survey posted the biggest one-month drop in history—to negative 21.5 in March from 12.9 in February. Economists had expected a much gentler decline.
Q4 and FY19 earnings:
- Athersys (ATHX) recognized a Q4/19 -$9.9 M loss or -$0.06 per share and ended the FY19 with a diminished cash position of $35 M along with an FY19 -$44.6 M loss or -$0.29 per share shortening the “runway” to early 2021.
I say that electronic trading has masked whether stockholders or the machines have been dumping equities amid worries the coronavirus is scaring the “be ‘Jesus” out of life of institutional and retail investors.
We can’t argue with the “numbers”, we are dealing with a bigger issue than just the coronavirus and the market’s decline – a bottom must be realized!
- 29 out of the 34-downside had higher than the 3-month average volume;
- The CBOE Volatility Index (VIX) was up +24.86 or +42.99%; the IWM was down -13.27%
The speed of the viral influence into America is unprecedented while markets are NOT healthy infected by pessimism and dysfunctionality.
- As multiple states and cities have banned gatherings of over 50 people, echoed by the Centers for Disease Control and Prevention, which recommends such restrictions to remain in place for at least eight weeks. Many cities have asked restaurants and bars to only provide orders to go, while schools for nearly 30 million children across the U.S. shut doors. Companies are advising employees to work from home, while store closures, travel bans, and border shutdowns continue around the globe.
STOP the spread of the coronavirus and UNHOOK the electronic trading machines!!
The market can’t bottom until we see an announcement of a vaccine for the coronavirus. No one knows where the infection rate will slow down or its ramifications.
The sector is grossly oversold and it’s time to play pick-up-stocks!!!
The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:
- Monday, the IBB closed down -8.96% and XBI also closed down -12.53%
- Friday, the IBB closed up +6.34% and XBI closed up +6.44%
The advance/decline line scenario of 35 covered companies:
- Monday, the close was negative with an A/D line of 1/34, 0 flat of 35 covered;
- Friday, the close was positive with an A/D line of 29/6, 0 flat of 35 covered;
Monday’s (only 1) incliners:
- Biostage (BSTG +$0.55 based on WHAT (?) – 2929 share volume <3-month average =3,481 shares> after Friday’s -$0.89);
Monday’s (lowest 5) decliners:
- Global Blood Therapeutics (GBT -$12.65 after Friday’s +$8.49);
- bluebird bio (BLUE -$10.08);
- Ultragenyx (RARE -$9.54);
- Sage Therapeutics (SAGE -$7.93 after Friday’s +$3.46);
- ReNeuron (RENE.L -$7.50);
The percentage (%) indicators:
- Monday, the range of the 1-upside was +0.22% (BSTG) while the 34-downside ranged from -3.22% (ALNY) to -25.93% (BLCM);
- 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);
Upside volume stats: to compare
- Monday: 0 out of the 1-upside had higher than the 3-month average volume;
- Friday: 24 out of the 29-upside had higher than the 3-month average volume;
Downside volume stats:
- Monday: 29 out of the 34-downside had higher than the 3-month average volume;
- Friday: 3 out of the 6-downside had higher than the 3-month average volume;
Monday closed negative with 34 decliners, 1 advancer and 0 flat
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.