February 3, 2020 7:52am

Many will be buying the dips although soon to appear, Q4 results will drain risk appetites

Pre-open indications: expect the sector to get a lift from being oversold (BUYs - 7)

My version of the morning’s numbers is written to be informative; it’s includes what happened or will beyond the headline and shapes today’s markets as seen by RMi - SUBSCRIBE

 

Dow future are UP +0.43% (+121 points), S&P futures are UP +0.50% (+16 points) and NASDAQ futures are UP +0.57% (+51 points)

 

U.S. stock index futures pointed to a higher open on Monday as the oversold were glaring and many economic indicators are set to shrug off fears over the spread of the novel coronavirus;

European markets were flat as investors experienced the first trading day of Brexit, coronavirus concerns as the pan-European Stoxx 600 hovered around the flatline in early trading;

Asia Pacific markets were impacted as Chinese stocks plunged 7% amid virus fears on first trading day after Lunar New Year holiday. Also, a private survey showed China’s manufacturing activity expanding in January, with the Markit/Caixin manufacturing Purchasing Managers’ Index (PMI) for January coming in at 51.1 for the month.

 

Data Docket: The final Markit Manufacturing PMI (Purchasing Managers’ Index) reading for January is due at 9:45 a.m. ET, before a range of January ISM manufacturing figures at 10:00 a.m. ET.

 

Henry’omics:

So, what’s up for February of Q1/2020 … a reset of expectation … to the UPSIDE.

  • The Dow had its worst day since August;
  • The S&P 500 had its worst day since October;
  •  The Nasdaq posted a +2% gain in January;
  • The Cboe Volatility Index (VIX), widely considered to be the best fear gauge in the market, rose to just around 19 this month from 13.78, a gain of more than 37%;
  • Last week the IBB fell -3.07% while the XBI fell -1.62% in five (5) sessions;
  • We also had four (4) negative and one (1) barely positive (by 1) closes in the week;
  • Percentages of the upside versus the downside was at is lowest with only one (1) serious high all week;
  • Volumes were all marginalized as compared to the three (3) month averages;
  • As January registered 10 positive, 9 negative closes and 2 holidays.

On a tactical basis, it means keep watching for signs of the oversold bounding to life, preparing for quarterly pre-earning’s selling, being aware of alternating volume levels and to … indulge in BUYING.

Given that a perfectly routine decline, what usually follows is a rally however, as 5% would annunciate the oversold uptrend… so, we could get back to being overbought – blame electronic trading not me for being and messenger of woe.

I especially follow, Canaccord Genuity strategist Tony Dwyer, who turned neutral on stocks from a bullish stance Jan. 20, is now waiting for technical indicators to reach extreme oversold readings before dialing up equity exposure again <CNBC>.

 

Again, I say “watch your corners”.

 

Friday night’s post’s title: “cavernous cell and gene therapy sector trends. My 35 company coverage list closed negative with an Advance/Decline (A/D) line of 5/29 and 1 flat after Thursday’s negative A/D line of 4/31 with 0 flat of 35 covered.”

  • The NASDAQ closed DOWN -148.00 points (-1.59%);
  • The IBB closed down -1.73% and XBI closed down -1.26%;
  • The range of the 5 upside was +1.24% (BCLI) to +24.44% (ADRO) while the 29 downside ranged from -0.18% (VYGR) to -8.27% (BLCM); 
  • 2 out of the 5 upside had higher than the 3-month average volume;
  • 5 out of the 29 downside had higher than the 3-month average volume;

 

Q1:

February, the first session

January registered 10 positive, 9 negative closes and 2 holidays.

Q4:

  • December register 11 negative and 10 positive closes
  • November registered 1 holiday, 12 positive and 8 negative close;
  • October registered 10 positive, 1 neutral and 14 negative closes;

 

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

Pre-open indications:  Many BUYS – PSTI, RGNX, MESO, VCEL, CRSP, GBT and BLUE

 

 

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.