Tag Archives for " biotech "
Trader Mailbag: IBB vs. XBI
Dear Mike, I noticed that sometimes in your newsletter (Editor’s Note: sign up free at the bottom of this article), you talk about XBI and other times IBB. What is the difference between these? Carl Thank you for the question Carl. XBI and IBB are the two most popular biotechnology ETF’s. XBI is the symbol for the SPDR S&P Biotech ETF. IBB is the symbol for the iShares Nasdaq Biotechnology Index ETF. As you can see in this 10-year monthly chart comparing the two, over the long run, they more or less trade in a similar fashion: But on a day-to-day basis, their performance can vary wildly. Here’s why. The IBB ETF is concentrated in a small number of large cap biotechnology stocks.. As of February 14, 2017, its top 5 holdings are as follows: Amgen (AMGN): 8.9% Celgene (CELG) : 7.5% Biotech (BIIB): 7.3% Gilead (GILD): 7.0% Regeneron (REGN): 6.6% These 5 stocks comprise a whopping 37.3% of its assets, and a large movement in just 1 of them can disproportionately move the ETF. For example, if Amgen was to rally 10%, it alone would push the entire ETF up 0.89%. (for my fellow math nerds: 10% X 8.9% = 0.89%) XBI, on the other hand is much more diversified, an includes a number of small and mid-cap biotech stocks. Here are its top 5 holdings: ARIAD Pharmaceuticals (ARIA): 3.9% Clovis Oncology (CLVS): 3.6% Tesaro (TSRO): 2.9% ACADIA Pharmaceuticals (ACAD): 2.9% Exelexis (EXEL): 2.7% These 5 names account for just 16% of assets vs. 37.3% for IBB’s top 5 holdings. Interestingly enough, while IBB gets significantly more media attention than XBI, IBB is actually less liquid. XBI trades an average of 5.8 million shares per day vs. 1.4 million per day for IBB. This is likely because of IBB’s higher nominal price of $268 vs. XBI’s $69.
Continue Reading -->Morning Call Express: America Speaks
In today’s Morning Call Express, Scott Redler talks about the impact of Donald Trump being elected the next President of the United States of America. Scott talks about where the markets were at the lowest point, overnight, and where it is looking to open. He helps put things in perspective and provides a roadmap to navigate today’s open. Scott also discusses the reaction in biotech land and gold.
Continue Reading -->T3’s Take 3: Stocks Drop Ahead of Epic Trump vs. Clinton Showdown
A Unique Way to Trade Options… My buddy Doug Robertson is hosting a FREE options trading webinar this Thursday. Doug’s going to be teaching his unique method for creating income with options, so I suggest you check it out. ********* 1) Disney for Twitter? Seriously? Twitter (TWTR) shares got a huge lift on record options volume Friday on rumors that the company could be acquired by Google (GOOGL) or Salesforce.com (CRM). Today, a host of analysts and commentators threw water on the rumors, and the stock was even downgraded by Oppenheimer, driving some profit-taking. But this afternoon, Bloomberg reported that Disney (DIS) is working with an adviser on a potential Twitter bid, sending the stock up all over again. Presumably, Twitter’s real-time news and data feeds could be integrated into Disney media properties like ABC and ESPN. However, a T3 Twitter poll indicates that trader still think Google (GOOGL) is the most likely buyer, assuming it happens at all: 2) Bank Scare Drives Downside German Chancellor Angela Merkel ruled out state assistance for Deutsche Bank (DB) before next year’s national election, which hit the stock hard. Deutsche has been fined $14 billion by the US Department of Justice for its mortgage-backed securities practices, which could cause liquidity problems for the bank. That sent European equities down this morning, setting the tone for the US. The S&P 500 fell -0.9% to 2146.10, with the Nasdaq Composite and Russell 2000 making similar moves. US bank stocks led the decliners’ column, following their European counterparts. Gold mining stocks fell after precious metals slipped in the afternoon. On the plus side, crude oil and energy stocks pushed higher on continued chatter about a possible OPEC output freeze. 3) Trump vs. Clinton The first Presidential debate between Donald Trump and Hillary Clinton will be held tonight. Aside from the general market fallout, traders will especially be interested in how health care and drug stocks perform tomorrow. One major reason biotech (IBB) has rallied in recent weeks was Hillary Clinton’s pneumonia diagnosis. Since she has been an outspoken critic of rising drug prices — specifically targeting Mylan’s (MYL) Epipen — she is seen as an enemy of biotech and big pharma. Her illness boosted Trump in the polls, which in turn gave biotech a reprieve. So if Clinton scores a clear victory, drug and biotech stocks are likely to fall. And obviously, the reverse is likely to be true if Trump wins. Tuesday’s Trading Calendar US Economics (Time Zone: EDT) 09:00 S&P CoreLogic CS US HPI MoM SA (Jul): prior 0.21% 09:00 S&P CoreLogic CS 20-City NSA Index (Jul): prior 189.87 09:00 S&P CoreLogic CS 20-City MoM SA (Jul): exp. 0.00%, prior -0.07% 09:00 S&P CoreLogic CS 20-City YoY NSA (Jul): exp. 5.10%, prior 5.13% 09:00 S&P CoreLogic CS US HPI NSA Index (Jul): prior 182.42 09:00 S&P CoreLogic CS US HPI YoY NSA (Jul): prior 5.07% 09:45 Markit US Services PMI (Sep P): exp. 51.2, prior 51 09:45 Markit US Composite PMI (Sep P): prior 51.5 10:00 Consumer Confidence Index (Sep): exp. 99, prior 101.1 10:00 Richmond Fed Manufact. Index (Sep): exp. -2, prior -11 11:15 Fed Vice Chair Fischer Discusses Why Study Economics? Global Economics 04:00 EUR M3 Money Supply 20:20 AUD RBA Assist Gov Edey Speaks Earnings Before Open: None of significance After Close: Cintas (CTAS) Nike (NKE)
Continue Reading -->The Morning Hammer: Time for a Break?
Global equities are down for the first time in 5 days as profit-taking sets in. We’ve had a nice central bank-driven surge over the past 2 days and markets are taking a break. Crude oil is red but off morning lows after Bloomberg reported that Saudi Arabia may have offered to cut production if Iran agreed to freeze output. This seemingly increases the probability of some type of coordinated output freeze/cut at next week’s OPEC meeting in Algiers. However, keep in mind that the OPEC news flow has been all over the place. I wouldn’t be surprised to see headlines this afternoon saying there’s no chance of a deal. I’m long oil, so this chatter is good for my portfolio, but the back and forth is getting exhausting. Today’s economic calendar is pretty light, with thee Markit US Manufacturing PMI at 9:45 a.m. and the Baker Hughes Rig Count at 1:00 p.m. We’ll also have Fed heads speaking today. Harker, Mester, and Lockhart will appear together on a panel at the Philly Fed conference at 12:00 p.m., while Kaplan will speak in Houston at 12:30 p.m. Overnight, the euro-area IHS Markit PMI fell in September due to weakness in Germany. Facebook (FB) is taking a hit this morning after it announced it over-inflated video views. Facebook insists that the issue did not impact billing to advertisers, but it certainly raises questions about platform engagement. Yahoo (YHOO) is also off on continued fallout from its security breach. Sentiment is still pretty mixed, so it’s hard to get a gauge of just how overheated (or is it underheated?) the market is. Thus far, the bears have been failing at every turn, so let’s see if they can change that today. I’d still key on biotech (IBB). It’s hard to break the market when biotech’s strong, so that’s a primary area of interest right now. IBB broke above $300 yesterday for the first time since January on a solid string of good news including mergers (both real and imagined) and positive drug data. Good luck out there.
Continue Reading -->T3’s Take 3: Stocks Hit the Snooze Button Ahead of a Very Big Wednesday
Prop Trading May Not Be Right For You… But it has incredible financial benefits for many traders. Click here to learn more… 1) Holding Pattern Ahead of a Very Big Wednesday Last week, we saw a rebound in volatility as traders put the summer snoozefest behind them. But stocks quieted back down today ahead of Wednesday’s big Federal Reserve and Bank of Japan meetings. The S&P 500 was flat 2139.12. The Nasdaq underperformed due to weakness in select large-cap tech names like Apple (AAPL) and Amazon.com (AMZN). The Russell 2000 was an outlier to the upside with a 0.6% gain, and we also saw nice gains in utilities, real estates, financials, and transports. US Treasuries, retailers, and pharmaceutical names led the decliners’ column. 2) Watch the SPX 2147-2148 Pivot This morning, T3’s Jeff Cooper highlighted key levels to watch going forward: 2147/2148 is a key level on the SPX. A) It was the August low of the long summer Slim Jim. Consequently it is the Monthly Swing Pivot—where the monthlies tuned down In September on trade below the August low. B) It ties to a 50% retrace from the 2193 all-time high to the 9/12 2118 low. Interestingly, on the Square of 9 Time & Price Calculator, 2148 also points to/aligns with September 21 and the important Gann Autumnal Equinox. Of course, this is also the date of the big Fed announcement on interest rates. You can’t make this stuff up! 3) Be Very, Very Careful Shorting Biotech This morning, Sarepta Therapeutics (SRPT) received FDA approval for Eteplirsen, a treatment for Duchenne muscular dystrophy. The stock hit a circuit breaker, reopened, and skyrocketed to finish up 74% on the day. Eteplirsen is considered to be a controversial drug, so many traders – especially shorts – were shocked by the news. Over 33% of the float was sold short, which means some folks were put out of business. So please folks, be very, very careful shorting biotech. P.S. Don’t forget to sign up for our next prop trading event! Tuesday’s Trading Calendar US Economics (Time Zone: EDT) 08:30 Housing Starts (Aug): exp. 1190k, prior 1211k 08:30 Housing Starts MoM (Aug): exp. -1.70%, prior 2.10% 08:30 Building Permits (Aug): exp. 1165k, prior 1152k 08:30 Building Permits MoM (Aug): exp. 1.80%, prior -0.10% Global Economics 12:50 CAD BOC Gov Poloz Speaks Tentative JPY Monetary Policy Statement Earnings Before Open: Carnival Corp (CCL) Lennar Corp (LEN) After Close: Adobe Systems (ADBE) Copart (CPRT) FedEx Corp (FDX) KB Home (KBH)
Continue Reading -->The Morning Hammer: Is Today a Big Day?
I thought yesterday would be a big down day for the market with yet another string of economic data misses, and I was wrong. Equities were pretty strong yesterday, with nice action in biotech and large cap tech. This morning is another story. Deutsche Bank (DB) said the US Department of Justice is seeking $14 billion to settle its MBS probe. DB is not willing to pay that much and the stock is taking a bit hit. That’s helping push European banks down -2.4% in the early going, while the broader Euro Stoxx 50 is off -1.4%. In analyst-land, Nicholas Smith of CLSA said he is “absolutely certain” that the Bank of Japan will stop buying Nikkei 225-based ETFs to boost equities. However, said the bank will not stop buying — they will simply shift their purchases to the Topix and JPX-400. SPX futures are taking a -0.4% dip this morning, following Europe down. Apple (AAPL) is up premarket as iPhone 7 goes on sale. Canaccord also raised its target price to $140 from $120. However, the big news today is the CPI report which hits at 8:30 a.m. ET. The market is split right down the middle on rate hikes. Fed funds futures imply a 50% chance of a December rate hike, down from 60% last week. Economic data has been slipping hard since the July 29 GDP report, and it seems like traders just started paying attention to this important trend. This CPI report will be the last major economic data release before the September 21 rate decision, so there’s a chance we end the week with a bang. The only problem is we can’t figure out what kind of bang. Yesterday, we got a huge batch of dove-supporting bad data and gold and US Treasuries still fell. And equities seem to be reacting randomly to Fed chatter and data too. So even if you gave me the numbers now, it still wouldn’t be easy to trade this CPI report. Near-term, I’d keep a very close eye on Apple (AAPL) and biotech because they’ve been holding up the market. Apple’s got a chance of a sell-the-news reaction today as we see 10 million news reports about iPhone sellouts. Biotech’s still a wild card because the whole sector is moving on takeover chatter surrounding individual companies. Today is also quad-witching options expiration, so get ready to hear everyone’s cockamamie theories on what it means for the action. (I think it’s completely random) I’d also keep an eye on oil. Good luck out there!
Continue Reading -->The Morning Hammer: The Comeback
Crude oil is up fractionally this morning despite a smaller-than-expected drop in crude oil inventories, as reported by the API yesterday after the close. EIA inventory numbers are due at 10:30 a.m. ET. Bloomberg is also reporting that China is boosting crude oil imports due to declining domestic output. It looks like oil traders are cautious heading into the OPEC meeting. It’s clear that chatter about production freezes/cuts has helped oil climb off the lows, but we are seeing lots of conflicting headlines about OPEC’s strategies and there’s no telling what’s going to actually happen. SPX futures are in positively territory after the second big decline in the past three days. The bears definitely drew some blood, and It definitely feels like volatility is back after 51 trading days without a -1% down day. Sentiment is mixed but leaning negative. The CBOE equity put-call ratio was 0.75 yesterday, which isn’t overly bearish. The ISE Sentiment Index was 60 though (60 calls for every 100 puts), which is a sign of tension. The 10 day moving average has moved down to 82.6 which is a sign of growing bearishness. Apple (AAPL) is up this morning on chatter that iPhone 7 chip orders are higher than expected. This is no surprise given that T-Mobile (TMUS) and Sprint (S) both reported strong iPhone 7 pre-orders yesterday. The WSJ issued a negative article on Tesla (TSLA), saying the Model 3 will be hurt by competition from the Chevy Bolt. And yesterday, noted hedge fund manager and short seller called Tesla/Solar City (SCTY) a “walking insolvency.” But yesteday, Schaeffer’s Research reported that Tesla’s 10-day put/call ratio is at an annual, implying that a lot of traders are betting hard against Tesla. That kind of negativity can actually form a cushion because it implies that negativity is priced in. As was rumored yesterday, Bayer agreed to buy Monsanto (MON) for $128/share in cash, up slightly from the last offer of $127.50. Overnight, UK unemployment remained at an 11-year low in July. France’s CPI was in-line with expectations. Thailand left rates unchanged, as expecteed. China’s aggregate financing was 1.47 trillion yuan in August, blowing away the 949 billion consensus. I’d continue to keep it simple. Watch oil, biotech (IBB), and the Russell 2000 for clues. That’s the stuff the bears can use to generate a real scare, so see if they build higher. Good luck out there.
Continue Reading -->If Trump Wins, I’m Buying Mexico… and 4 Other Thoughts on Today’s Action
Learn to Trade From Our Pros This Week: Tuesday 9/13: Dynamic Short-Term Trading With Dave Green Thursday 9/15: Day and Swing Trading Signals You Need to Know – Part 2 (Click here to watch a replay of Day and Swing Trading Signals You Need to Know – Part 1) ******** 1) Biotech Saves the Day The first clue that the bull was ready to fight back today was the early rebound in biotech (IBB), which was supported by 3 pieces of favorable news: Gilead (GILD) talking its willingness to make more acquisitions The HZNP-for-RPTP acquisition Hillary Clinton’s unfortunate illness. (she is seen as an enemy of biotech, so anything that favors Trump over her supports the sector) 2) Buy Mexico on Trump? Since Trump’s prospects are looking up today, the Mexican peso is selling off, as are Mexican equities. Given that Presidents tend to moderate once they’re in office, a Trump victory could mean a buying opportunity in Mexico once we’re past the initial fallout. The average person may think Trump spells disaster for Mexico. But I imagine that a worst-case scenario would get priced in immediately — courtesy of the same media that sold the Brexit as the end of the world. So if Trump wins — I am going long Mexico through an ETF like EWW or a closed-end fund. I’m not making a political endorsement here — I’m just looking for an opportunity. 3) Strong Oil Crude oil made a beautiful pop off the morning lows after OPEC fractionally increased its global oil demand forecast. However, the OPEC meeting in Algeria is still a total mystery. We are still seeing tons of conflicting headlines regarding production freezes or cuts, and there’s no telling what will actually happen. Maybe some confusion is good, because heading into the June meeting, traders were pretty certain that we’d see a freeze or cut, and they were sorely disappointed. 4) VIX Mix The VIX is slowly grinded lower today as equities penetrates further into the green, which is eating away at my calls. However, I still think the VIX made a major low in August and it’s likely to spike again. The reason? Time. We had 51 days without a real down day, but there’s a very good chance the pendulum is swinging the other way. 5) Watch the Regional Banks XLF started rotten and has made a big turnaround intraday. I’d watch for more upside catch-up in the regional bank ETF (KRE), which is still off -0.5%.
Continue Reading -->T3’s Take: Oil and Biotech Scream but Fail to Start a Party
1) Oil Blasts Into Orbit Today, we saw the biggest decline in US crude inventories since January 1999. The Energy Information Administration said US crude stocks fell -14.5 million barrels last week. Traders were expecting a 905K increase, so needless to say, the market was taken by surprise. WTI crude rose 4.2% to $47.41, and in turn, energy stocks led the market. Oil service names were especially strong. However, we still see a lot of conflicting headlines regarding possible changes in OPEC policy, so stay on your toes. 2) Biotech Rips on More Deal Hopes Yesterday, biotech caught a bid into the close after Reuters reported that GW Pharmaceuticals (GWPH) hired advisers after being approached for a takeover. Today, Gilead (GILD) added to the positivity by saying at an investor conference that it “feels an urgency” to do deals, noting an interest in cancer drugs. Traders immediately looked at cancer treatment specialists Tesaro (TSRO) and Clovis Oncology (CLVS) as potential targets, and both stocks rose sharply today. The Nasdaq Biotech Index ETF (IBB) rose 0.7% to $288.03, vastly outperforming the major indices. 3) Stocks Grind Gears Even with crude oil and biotechnology rocking hard, the S&P 500 couldn’t drive any upside, and it declined -0.2% to 2181. That felt a bit odd, since typically, stocks perform well when oil and biotech rally. Apple (AAPL) sank -2.6% on a downgrade from Wells Fargo, which weighed on the Nasdaq. Gold took a hit today as the dollar rose sharply against the yen, which sent gold miners (GDX) sharply lower. We also saw weakness in US Treasuries, retailers, and real estate names. Friday’s Economic Calendar US Economics (Time Zone: EDT) 08:15 Fed’s Rosengren to Deliver Economic Forecast in Boston 09:30 Fed’s Kaplan Speaks in Austin, Texas 10:00 Wholesale Inventories MoM (Jul F): exp. 0.10%, prior 0.00% 10:00 Wholesale Trade Sales MoM (Jul): exp. 0.20%, prior 1.90% 13:00 Baker Hughes U.S. Rig Count (9/9): prior 497 13:00 Baker Hughes U.S. Rotary Gas Rigs (9/9): prior 88 13:00 Baker Hughes U.S. Rotary Oil Rigs (9/9): prior 407 Global Economics 04:30 GBP Goods Trade Balance 08:30 CAD Unemployment Rate Earnings Before Open: Hovnanian Enterprises (HOV) Kroger (KR) Mattress Firm Holding (MFRM) After Close: None of Significance
Continue Reading -->Oil Booms! And 4 More Thoughts on Today’s Action!
1) Oil Booms! We just saw the biggest decline in US crude inventories since January 1999. Traders were looking for a 905K build but the EIA report showed a drop of -14.5 million barrels. Yesterday after the equity market close, the API reported a -12 million barrel decrease, which certainly set the stage for a bullish EIA report. WTI crude is now up 3.8% to $47.22. We are still seeing tons of conflicting headlines regarding a change in OPEC policy, so stay on your toes. 2) Biotech Follows Through Yesterday into the close, biotech got a huge bid after Reuters reported that GW Pharmaceuticals (GWPH) hired advisers after being approached for a takeover. Today, Gilead (GILD) supported biotech M&A hopes by saying it “feels an urgency” to do deals. Traders are already looking at Tesaro (TSRO) as a possible target, and that stock is ripping. More deals would certainly help IBB get above the widely watched $300 mark, which in turn would be a big psychological victory for the bulls. 3) Looking at Bonds/Utilities EWI is up 3.4% since I added it to my little experimental income model portfolio. I’m now looking back at adding some US bond or utilities exposure based on my assumption that Fed rate hikes may come slower than many traders expect. 4) Gold Scold The US dollar is ripping pretty hard intraday as Treasury yields pick up. And gold is getting smacked down, with the gold miners (GDX) off -1.7%. Part of this is profit-taking after the recent rebound on lousy economic data, so I wonder if the gold bugs push back soon. 5) Hot New Issues The hot post-IPO names are all over the place. Line Corp (LN) and TPI Composites (TPIC) look great, while Acacia (ACIA) is sliding If the bears are to succeed, they need to knock these names out all at once. I’d also eyeball Twilio (TWLO) and Impinj (PI).
Continue Reading -->