April 2, 2020 5:38pm
Uncertainty reflecting the unknowns, the when of the infection curve flattening, the why of fundamentals being back as a measurement tool and to what extent will volatility disappear as unemployment and business closure not being measured as a liability?
Pre-open indications: 8 HITs < ATHX (-$1.24), BLUE (+$0.10), FATE (+$0.66), IONS (+$2.16), RARE (+$3.11), RGNX (+$0.29), GBT (+$1.83), SAGE ($0.00) > and 3 MISS < ALNY (-$0.33), ADVM (-$0.21), MESO (-$0.03),
My motto, “Never leave an investor uninformed” as volatility sketches a contradictory picture of the short-term.
The Dow closed UP +469.93 points (+2.24%), the S&P closed UP +56.440 points (-2.28%) while the NASDAQ closed UP +126.73 points (+1.72%)
Indexes inclined in volatile trading Thursday as oil prices jumped on expectations Saudi Arabia and Russia will ease the pressure off the oil market although the major averages cut most of their gains in early afternoon trading.
- Traders have been closely watching oil because of its influence over other financial markets;
- Volatility must be weighed as a massive spike in unemployment claims will enable the growing negative impact of businesses being shutdown to stop the spread of the coronavirus on the economy;
- The estimates of unemployment are as high as 9 – 10 million which has yet to be factored into the impact on the U.S. economy;
- The major stock averages are all down more than 20% year to date;
- All the above contribute to sentiment and its negative consequences.
The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:
- Thursday, the IBB closed up +3.77% and XBI also closed up +3.64%
- Wednesday, the IBB closed down -3.67% and XBI also closed down -5.40%
- Tuesday, the IBB closed down -1.01% and XBI also closed down -0.76%
- Monday, the IBB closed up +3.57% and XBI also closed up +2.05%
Volatility in the market is usually inversely correlated in the short-term. The CBOE Volatility Index (VVIX: INDEX) tracked:
- Thursday was down -6.15 points or -10.78% at 50.91,
- Wednesday was up +3.53 points or +6.59% at 57.07,
- Tuesday was down -3.54 points or -6.20% at 53.54,
- Monday was down -8.46 points or -12.91% at 57.08,
- Last week, the VIX eclipsed its financial crisis high, closing at 82.69.
RegMed/Cell and gene therapy 35 covered equities’ Advance/Decline (A/D) lines: progressions and regressions
- Thursday opened negative territory at 11/23 and 1 flat continuing to the mid-day positive at 25/8 and closed positive at 23/10 and 2 flats;
- Wednesday’s opened negative at 6/28 and 1 flat and closed negative at 4/31 of the 35 covered companies;
- Tuesday Cell and gene therapy equities closed neutral;
- Monday opened negative at 8/24 and 3 flats and closed positive at 20/15 of the 35 covered companies.
Thursday’s (only 10) incliners:
- Ultragenyx Pharmaceuticals (RARE +$3.11 after Wednesday’s +$2.48);
- Ionis Pharmaceuticals (IONS +$2.16);
- Global Blood Therapeutics (GBT +$1.83 after Wednesday’s -$2.36);
- Homology Medicine (FIXX +$1.53);
- Editas Medicine (EDIT +$1.48);
- uniQure NV (QURE +$1.33 after Wednesday’s -$1.82);
- CRISPR Therapeutics (CRSP +$1.01 after Wednesday’s -$3.91, Tuesday’s -$1.88, Monday’s +$2.47, Friday’s -$2.17 and last Thursday’s +$2.21);
- Fate Therapeutics (FATE +$0.86 after Wednesday’s -$2.00, Tuesday’s -$0.95, Monday’s +$0.98, Friday’s -$1.13 and last Thursday’s -$0.09);
- Intellia Therapeutics (NTLA +$0.86);
- Voyager therapeutics (VYGR +$0.65);
Thursday’s (bottom 10) decliners:
- Athersys (ATHX -$1.24 after Wednesday’s +$1.22 and Tuesday’s +$0.98);
- AxoGen (AXGN -$0.41 after Wednesday’s -$1.72, Tuesday’s +$0.15 and Monday’s +$0.92);
- Cellectis SA (CLLS -$0.40);
- Pluristem (PSTI -$0.13);
- Adverum (ADVM -$0.21);
- Biostage (BSTG -$0.06 after Wednesday’s +$0.20);
- Bellicum Pharmaceuticals (BLCM -$0.06);
- Solid Biosciences (SLDB -$0.020;
- Mesoblast (MESO -$0.03 after Wednesday’s +$0.17);
- Alnylam Pharmaceuticals (ALNY -$0.33 after Wednesday’s -$4.31);
- Ultragenyx (RARE +$2.74), bluebird bio (BLUE +$0.10 after Wednesday’s -$0.63 after its 4th slide),
- Athersys (ATHX -$1.54 or -38.70% to $2.44) after its 6th session as I have stated since it traded at $2.59 – 4 sessions ago as 24.778 million shares traded as compared to the 3-month number of 1.985 million shares – a definitive I told you so;
Volumes versus 3-month averages:
Thursday’s volume was LOW as 4 out of the 10-upside had higher than the 3-month average volume with even LOWER volume as only 2 out of the 23-downside had higher than the 3-month average volume.
- Wednesday’s volume was LOW as 3 out of the 4-upside versus 6 out of the 31-downside;
- Tuesday’s volume was low as 3 out of the 17-upside versus even lower volume as only 2 out of the 17-downside;
- Monday’s volume was minimal as 5 out of the 20-upside with nominal volume versus only 4 out of the 15-downside.
Percentage (%) movement/range statistics: thinning …
Thursday’s range of the 23-upside was +0.24% (BLUE) to +10.41% (FIXX) while the 10-downside ranged from -0.32% (ALNY) to -31.16% (ATHX);
- Wednesday’s % of the 4-upside ranged +3.88% to +32.67% while the 31-downside ranged from -0.91% to -19.12% and highlighted disparity of volume:
- Tuesday’s % of the 17-upside while the 17-downside were lower:
- Monday’s % of the 20-upside were +1.45% (EDIT) to +37.54% (PSTI) while the 15-downside ranged from -0.38% (RGNX) to -9.52% (RENE.L) were a lot higher than usual.
Sentiment and its indicators: The unprecedented societal disruption reflects a hair of optimism as to a bottom “unfolding” as a virus of pessimism caused financial distress and volatility as never seen before …
- In just the past two weeks alone, new claims have easily exceeded the peak number of people who collected benefits during the 2007-2009 recession. A then-record 6.6 million people drew benefits at the tail end of the last recession.
Defining pandemic disruption: The number of confirmed U.S. coronavirus cases:
- Jumped on Thursday to 234,400,
- Wednesday to 200,000,
- Tuesday to 177,452,
- Monday’s 153,200,
- Friday’s 97,028,
- Thursday’s 69,000 and
- Last Wednesday’s 55,568
Thursday’s death rate escalated to 5,607 after Wednesday’s 4,400, Tuesday’s 3,440, Monday’s 2,828, Friday’s 1475, Thursday’s 1,000 and last Wednesday’s 809. <John Hopkins University>
The BOTTOM LINE: it was VERY interesting listening to legendary short seller Jim Chanos who said in a CNBC interview Thursday that there are still overvalued stocks despite the sharp contraction in the equity market.
- But what also jumped out was talk about some companies being “magicians in covering-up their status of hiding representations or deceptions in "plain sight” especially in my interpretation of those with “going concerns”.
- He also spoke” about being short on Chinese run companies” with “manic speculation” re their product or platform categories as he spoke directly to accounting schemes ot their financing "schemes".
- The time has come to “unmask” those that are “capital depreciated” as they continue to lose money;
- We should be aware they’re in our own backyard!
Check out the supporting data groupings and their numbers …
The percentage (%) indicators:
- Thursday’s range of the 23-upside was +0.24% (BLUE) to +10.41% (FIXX) while the 19-downside ranged from -0.32% (ALNY) to -31.16% (ATHX);
- Wednesday’s range of the 4-upside was +3.88% (MESO) to +32.67% (ATHX) while the 31-downside ranged from -0.91% (IONS) to -19.12% (PGEN);
- Tuesday’s range of the 17-upside was +0.02% (ALNY) to +15.83% (ATHX) while the 17-downside ranged from -0.76% (VCEL) to -11.35% (PSTI);
- Monday’s range of the 20-upside was +1.45% (EDIT) to +37.54% (PSTI) while the 15-downside ranged from -0.38% (RGNX) to -9.52% (RENE.L);
Upside volume stats: key numbers
- Thursday: 2 out of the 23-upside had higher than the 3-month average volume;
- Wednesday: 3 out of the 4-upside had higher than the 3-month average volume;
- Tuesday: 3 out of the 17-upside had higher than the 3-month average volume;
- Monday: 5 out of the 20-upside had higher than the 3-month average volume;
Downside volume stats:
- Thursday: 4 out of the 10-downside had higher than the 3-month average volume;
- Wednesday: 6 out of the 31-downside had higher than the 3-month average volume;
- Tuesday: 2 out of the 17-downside had higher than the 3-month average volume;
- Monday: 4 out of the 15-downside had higher than the 3-month average volume;
2 flats – ReNeuron (RENE.L) and Sage Therapeutics (SAGE)
Thursday closed positive with 10 decliners, 23 advancer and 2 flats
Wednesday (4/1) closed negative with 31 decliners, 4 advancer and 0 flat
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.