July 12, 2024 8:13am

As I wrote yesterday, “Are we ignoring or dismissing the downside risks in these parabolic indexes moves alongside uncertain economic, political and earnings season times?”

“Uncle algo and his electronic trading dwarfs” are thirstin’ for some on-base profits

Pre-open Indications: passing today

The producer price index rose 0.2% last month, the Labor Department’s Bureau of Labor Statistics reported on Friday. Economists were expecting a 0.1% increase for the index. PPI is now up 2.6% over the past year.

A daily analytic read-out from RMi is constructed of signals thought-provoking share pricing situations

Never leave an investor uninformed

 

Remember that overnight and pre-open actions’ futures and markets doesn’t necessarily translate into actual trading in today’s market session.

My interpretation of the morning’s numbers is written to be informative; it’s built on what happened or will happen behind the headline today, not tomorrow or yesterday

 

Friday: The pre-open Dow futures are UP +0.04% or (+18 points), the S&P futures are UP +0.03% or (-1points) as the Nasdaq futures are DOWN -0.02% or (-4 points)

  • U.S. stock futures were mixed and “barely” on Friday,
  • European stocks were higher,
  • Asia-Pacific markets traded mixed.

 

Henry’omics:

We need to more than consider the economic environment to comprehend the micro re “our” universe of cell and gene therapy companies …

Thursday: The Dow closed UP +32.39 points or +0.08%, the S&P closed DOWN -49.37 points or -0.88% while the Nasdaq closed DOWN -364.04 points or -1.95%.

For the week so far (through Thursday’s close), the Dow is up +1%, the S&P 500 +0.3%, while the Nasdaq is down -0.4%.

Economic Data Docket: June’s producer price index (PPI) results. July’s preliminary consumer sentiment numbers from the University of Michigan are also due

 

RegMed Investors (RMi) Closing bell: “still on the mound, strike 1 after morning post and waiting for the second pitch. However, I am still of the opinion that, that it’s a “warning, for an overbought sector … ignores or dismisses the downside risks in these parabolic indexes moves alongside uncertain economic, political and upcoming earnings season?” … https://www.regmedinvestors.com/articles/13532

 

Q3/24:

  • July: 1 market holiday. 1 day off, 2 negative, 1 neutral (last Friday) and 4 positive (this week) closes

Q2/24: 

  • June – 1 market holiday, 7 positive and 1 negative closes
  • May – 1 holiday, 11 positive and 11 negative closes
  • April - 16 negative and 6 positive closes

 

Companies in my headlights – It’s your decision; I provide ideas and context:

I post about “indication intelligence” devoting my time to collection and analysis of information to assist investors with insight into sector vulnerabilities and strengths. A dictionary definition of “indicate” refers to something less than a certainty; an indication could be a signal of being oversold or overbought, a recommendation, or grounds for inferring or a basis for believing.

Yet again, I am passing on forecasting the daily indications as CPI will be announced and I believe many equities are OVERBOUGHT and about to be SOLD into by electronic trading focused as the aftermarket fluctuated while the pre-open waits for the all-clear alarm …  it is still a mix of ups, downs and just unknowns.

 

The BOTTOM LINE:  Insight is about understanding perception … and possibly inevitability …

I STILL “got” that feeling i.e., a “beat” flutter… what’s about to change … I say everything!

  • Are we headed to a clash of algos and electronic trading with the PPI data being due Friday.
  • Reiterating, “Every time, when I hear and read new highs – I say BYE!”

 

Always read from others in the know to be aware:

  • Investors shouldn’t be chasing after small caps, the move in the Russell 2000, which popped about 3.6% in Thursday’s session, is a knee-jerk reaction. What’s leading today is rate-sensitives and risk, low quality. The issue with buying low quality and risk is that when earnings season comes, and particularly because we’ve seen bad macro news, rising unemployment, softer inflation, you’re going to get earnings misses.” <Piper Sandler’s Michael Kantrowitz, chief investment strategist >

 

Biotech stocks rally on hopes for lower rates ahead

  • The iShares Biotechnology ETF (IBB) hit a multiyear high in trading Thursday, dating back to January 2022, for the first time since February, as investors renewed their appetite for riskier stocks.

IBB’s 2.1% bump up was led by stocks (covered by me) such as

  • Generation Bio (GBIO) +31.96%
  • Regenxbio (RGNX) +20.17%
  • Solid Biosciences (SLDB) +18.63%
  • Voyager therapeutics (VYGR) +10.64%

Yesterday’s price leaders:

  • Vericel (VCEL) $3.96 or +8.71%
  • Alnylam Pharmaceuticals (ALNY) $3.226 or +1.26%
  • Beam therapeutics (BEAM) $1.92 or +8.01%
  • Blueprint Medicine (BPMC) $1.84 or 1.59%

 

Biotech companies, especially those at the clinical stage, are very dependent upon debt. For that reason, they tend to perform better when interest rates are lower.

  • With today’s gains, the IBB has risen about 6% year to date, with much of that momentum <CNBC>

 

My issue: The real question is whether or not Thursday's market shifts were a one-off or more-lasting rotation.

  • The Nasdaq is 6.5% above its 50-day moving average.
  • That's down from Wednesday's 9%, which was the most extended since June 2023.
  • But the Nasdaq is still stretched.
  • A modest pause or pullback, especially with Tech and bank earnings starting,
  • There's also the possibility that a pullback could be more substantial, especially if earnings do not go well.

 

The Russell 2000 has had a number of fake-outs, but Thursday's action seemed more meaningful.

  • The small-cap Russell 2000 gapped up 3.6%, hitting a three-month high and the best close since March 2022. The S&P 400 Mid-Cap jumped 2.45%, back above its 50-day line. <IBD

 

July to date:

  • Thursday ended with a positive close of 31 incliners, 2 decliners and 2 flats
  • Wednesday ended with a positive close of 23 incliners, 10 decliners and 2 flats
  • Tuesday ended with a positive close of 19 incliners, 12 decliners and 4 flats
  • (7/8) Monday ended with 24 incliners, 8 decliners and 3 flats
  • Friday ended with a neutral close of 16 incliners, 16 decliners and 3 flats
  • Thursday was a market holiday
  • Wednesday was a day off
  • Tuesday ended with a negative close of 6 incliners, 19 decliners and 3 flats
  • (7/1) Monday ended with a negative close of 13 incliners, 19 decliners and 3 flats

 

Staying with this quote:

“It's hard to argue with record highs almost on a repeated basis here." However, viewing the situation from a technical lens," identifies potential concerns. Markets appear overbought, with divergences in market breadth and a steady decline in economic indicators. Based on these factors, anticipate a short-term market pullback. < LPL Financial chief technical strategist Adam Turnquist>

  • If not tomorrow, it will be here very soon! - <me>

 

Due “dates” are soon for Q2 LPS (loss per-share) boding releases.

  • I’m still NOT feeling optimism --- it’s only a party for visits from “uncle algo and his electronic trading dwarfs”!
  • Reiterating, “There is still the issue of the lack of catalysts as we head into Q2 earnings season.”

 

Watch the “numbers, charts and indicators” measure the daily, weekly, and monthly charts can filter out or lessen the noise of back-and-forth share pricing from sector rotation.

  • The short-term moving averages help you identify the momentum of the trend — that is, overbought or oversold

 

Welcome to my world of defining the “grey’ in our universe!

  • Right up front, “I also hate to be so negative or contrarian but, this is a NO spin zone and facts are its product; I can always be WRONG but … I am mostly EARLY!”
  • The sector is what it is, until it isn’t and even then, it doesn’t seem to be… as NOT much changes as the sector’s share pricing rides the waves of volatility, algorithms, electronic trading and short covering.
  • I am more frequently right than consequentially wrong; if I wanted to be liked, I wouldn’t have been an analyst/journalist.

 

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. All investments are subject to risks. Investors should consider investment objectives.

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.  Regulation Analyst Certification (Reg AC): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and it’s or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Henry McCusker, the editor and publisher of RegMed Investors could hold or have positions securities referred to in this publication and he will NOTIFY investors of holdings.