February 20, 2018 7:46am

Sector intelligence and perspective

 

The problem is what expectation to anticipate and …

The issue is sorting fundamentals and technicals from pure speculation

As uncertainty is infectious while volatility is contagious

 

Be ready for a shot … the indexes and ETFs have toppled in the pre-open

 

Lower open expected

 

Dow futures are DOWN -0.70%% (-177 points) and NASDAQ futures are DOWN -0.71% (-48 points)

 

U.S. stock index futures fell sharply on Tuesday as interest rates climbed back toward multi-year levels.

European stocks were mixed

Asian shares closed lower on Tuesday after a relatively quiet overnight session, due to U.S. markets being closed for a holiday on Monday.

 

Issues to be faced at the open: Investors will continue to keep an eye on the bond market, as the prospect of higher interest rates continues to rattle sentiment.

Data docket: the Philadelphia Fed's non-manufacturing business outlook survey is scheduled to come out at 8:30 a.m. ET. No speeches by members of the U.S. Federal Reserve are set to take place.

In politics: investors fear higher inflation could lead the Federal Reserve to tighten monetary policy faster than expected.

 

 

Been where, done what …

Last week’s RegMed, stem and cell therapy sector’s record over 6 sessions (of 40 covered companies):

·         Monday the market was closed for President’s Day

·         Friday closed POSITIVE with 17 decliners, 18 decliners and 5 flats;

·         Thursday closed POSITIVE with 16 decliners, 20 advancers and 4 flats;

·         Wednesday closed POSITIVE with 10 decliners, 27 advancers and 3 flat;

·         Last Tuesday closed POSITIVE with 13 decliners, 24 advancers and 3 flat;

·         The previous Monday closed POSITIVE with 10 decliners, 28 advancers and 2 flats;

 

Henry’omics:

From last Friday night’s newsletter, “… a flip-flop is edge-sensitive as the sector opened barely up, sustained an upside at the mid-day dropping at 2 p.m. and closed scarcely to the upside. A flip-flop also defines the elements of risk tolerance variability in investor’s willingness to stomach swings in investment value; the issue is to sell or buy as “others” are selling. The problem, there’s always a specter of sudden or unexpected reversals, as sentiment and momentum relate to a company’s perception.”

Traders returned from the long U.S. holiday weekend to face fresh selling pressure for U.S. stocks.

Stock markets are now “trading near key resistance levels, and a break above them will require a positive catalyst which looks hard to find at this time.

 

After a weaker session on Monday, European stocks SXXP, +0.10% continued to struggle, while in Asia, Japan’s Nikkei 225 index NIK, -1.01%  and the Hong Kong Hang Seng Index HSI, -0.78%  each fell around 1%. Several bourses in Asia remain closed for the Lunar New Year holiday.

Extending losses, Dow Jones Industrial Average futures YMH8, -0.74% shed 188 points, or 0.7%, to 25,048, while S&P 500 futures ESH8, -0.69% gave up 19.25 points, or 0.7%, to 2,715.25. Nasdaq-100 futures NQH8, -0.71% tumbled 52 points, or 0.8%, to 6,732.75.

Last week, the Dow +0.08% and S&P 500  each gained 4.3%, while the Nasdaq leapt 5.3%, with all three gauges snapping a two-week losing streak.

The Dow and S&P 500 logged modest gains on Friday to manage a sixth-straight advance; the Nasdaq slipped slightly.

Stocks fell as a huge wave of U.S. Treasury issuance this week was depressing prices and lifting yields. Higher yields could increase the cost of corporate borrowing, a negative for stocks. Higher yields may also position bonds more attractively than stocks to investors. The Treasury Department will auction $28 billion of 2-year notes, $35 billion of 5-year notes and $29 billion of 7-year notes this week, with the 2-year auction hitting Tuesday. <MarketWatch>

While it is the year of the dog in China, today could be a barking dog day - warning!

 

 

Today’s indications:

  • The iShares Nasdaq Biotechnology (IBB) is indicating a NEGATIVE -0.32% downside in Tuesday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) is indicating NEGATIVE -0.51% downside in Tuesday’s pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) is indicating a NEGATIVE -0.47% downside in Tuesday’s pre-open;
  • The iShares Russell 2000 (IWM) is indicating a NEGATIVE - 0.63% downside in Tuesday’s pre-open

 

 

Companies in my headlights:

 

After a holiday, I’d let Tuesday shake out and be watching directional movement at the open especially with the downside influence of the indexes and ETFs.

There is NO news being generated by the sector as fundamentals are (in many companies) soft as technical (share trends) are in flux while trading volumes have been low.

 

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.