Tag Archives for " IBB "
The Red Dog’s Roadmap
The SPX futures are up 2 ahead of the Fed this afternoon. It has been a methodical move since clearing the descending channel above 2430 to take out 2453 before making a new all-time high at 2481. Now we’ll look to see if the active bulls stay in control with upper support at 2464 and yesterday’s low at 2474. IWM gave another calculated entry Monday after it reclaimed $142.25 and cleared $143.55 to hit a hgih of $144.25. It will need to hold $143.21 to keep active bulls happy and, if it can, extend another day towards a target of $145. XLE is trying to stay relevant as some are long vs the $64.50 stop while others want to see if hold the 50day of $65.86. IBB has its first bearish engulfing candle in a while and I did tweet that I sold around $329.50. After this move from $310, some digestion makes sense. Look for banks to be in play on fed day as JPM had a nice 2 day move. If it is able to hold the $92 area, I will be looking for it to make a move towards all-time highs in the days ahead.
Continue Reading -->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 -->Morning Call Express: A Leveled Approach
In today’s Morning Call Express, Scott Redler talks about some of the talking points that has the SPX futures down this morning. He also offers one of the rules he follows to determine what trading style to implement. Scott also looks at the QQQ and Biotech Index and provides additional insight into the current state of the markets.
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 -->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 -->The Apple Bounce, and 4 Other Things I’m Watching
1) Apple Bounces Apple (AAPL) is down but well off its morning low, which was driven by the EU tax ruling. The final verdict is unknown, but even in the worst case scenario, Apple may not feel a thing from a financial standpoint. The real significance, however, is seen in other tech names who have Ireland tax exposure: Facebook (FB) and Google (GOOGL) are off today. But for now this seems more like an excuse to take profits rather than an end-of-world scenario. An excuse may be enough though… 2) Crude Oil Crude oil is pretty weak today ahead of inventory numbers from the API (reported after the close today) and the EIA (tomorrow morning). Iraq will support an output freeze at next month’s OPEC meeting in Algeria, according to Prime Minister Abadi. However, what OPEC actually will do remains a mystery. A lot of traders got stung by OPEC’s failure to freeze production in June, and some folks are justifiably afraid of a repeat. 3) Biotech Biotech (IBB) is pretty listless today. I regularly harp on biotech’s importance to any serious bull move, but it does feel like it’s getting worn out. Check out the chart — IBB lost the 20 day and the 50 is coming up fast. 4) The Hawk Trade The big hawk trade is still going as Fed rate hike expectations have increased quite a bitver the past month. Gold is getting roughed up and the dollar’s in full rip mode. Active stock traders should be watching the Regional Banks ETF (KRE). It’s not nearly as followed as XLF, but it moves a heck of a lot more. 5) Dove Soup And on the flip side, the dove trades (utilities, Treasuries, housing) are coming under pressure. Like Jeff Cooper, I’m closely watching the junior gold miners (GDXJ). They’re still up 131% YTD, so if gold keeps flopping, the miners have an awful lot of room to drop. However, just be aware that these trades really can go anywhere. At the Brexit, traders were pricing in basically zero chance of a rate hike. Now they see 60% odds. Any big shifts in the broader markets or economic data could shake things up.
Continue Reading -->The Morning Hammer: Will Yellen Pull a Fast One at Jackson Hole?
All eyes are on FOMC Chair Janet Yellen’s 10:00 a.m. ET speech in Jackson Hole. Fed officials have been out in force the past few weeks pushing a hawkish narrative, and the market has responded. Fed fund futures now imply a 57% chance of a December rate hike, up from 47% a week ago and just 9% after the 6/24 Brexit. 57% is far from certain. However, the trend has been up, and the trend is what counts. This has been pushing up bank stocks and putting pressure on gold, particularly the miners (GDX). So now we’re at an interesting juncture. If Yellen indeed comes out hawkish as many traders expect, I wonder if we get an immediate spike in the dollar and dip in gold, with both moves getting reversed by the end of the day. I almost feel like all the Fed heads have been overselling the idea that rate hikes are coming, which could set up a sell the news situation. On the flip side, if we get a repeat of June — doves flying when everyone’s looking for hawks — expect a monumental rally in GDX. SPX futures are as flat as an ironing board, and crude oil is down fractionally. Aside from all the Fed-sanity, I’m really interested to see what biotech does. For 2 straight days, IBB has gone from first in the morning to worst in the afternoon on heavy volume. (see chart) The alleged cause has been Presidential candidate Hillary Clinton’s attacks on Mylan’s (MYL) pricing practices, which raises fears about future price controls. The reality is that no politician — not even the President of the United States — can simply wave a magic wand and lower drug prices. So I wonder if traders have been looking for excuses to sell, and Hillary happened to serve it up. IBB is down -16% on the year, but it’s also up 19% from its February low. We’ve also got GDP, U. of Michigan Sentiment, and the Baker Hughes Rig Count on the economic calendar. So maybe, just maybe we’ll get some excitement today after 34 days without a 1% move in SPX.
Continue Reading -->The Morning Hammer: The Bears Are Long F.O.M.O.
Get a Quant Edge in Today’s Markets Tomorrow after the close, Rob Smith is hosting a FREE webinar on his unique Quant Edge Trading Strategy. Read all about it The waiting game continues. We’ve now gone 32 trading days without a 1% up move, and 40 days without a 1% down move. It’s been a beautiful ride for the bulls becuase they’ve been enjoying a picture-perfect grind up. But it’s been hell for bears, particularly those buying put options. The slow upward movement and declining volatility slowly kills the value of those puts a penny at a time. I always think it’s far better to lose fast, because at least you get it over with. Now it seems like a lot of bears are tempted to capitulate to stop the slow bleed. But at the same time, there’s a big FOMO (fear or missing out) element. What if you cover just ahead of what seems like an inevitable market drop? I’m long VIX calls (which is basically a highly leveraged SPX short), so that’s the boat I’m in. I’m down about 9%, which isn’t the end of the world on an options positions, but I admit I’m growing restless. SPX futures are up fractionally following a decent up day in Europe. The stalemate looks set to continue ahead of FOMC Chair Janet Yellen’s Jackson Hole speech this Friday. It seems like traders are starting to buy into the recent hawkish trend in Fedspeak. Fed fund futures now imply a 53% chance of a December rate hike, up from 45% a month ago and 9% post-Brexit on June 27. That has gold and Treasuries sagging a bit. Crude oil is off a little on the American Petroleum Institute inventory report. The API said we had a 4.5 million barrel build in US crude stocks last week, which was a surprise. We get EIA data today at 10:30 a.m. ET. The current consensus calls for an -850K decline in inventories. However, remember that oil has been moving on chatter about the September OPEC meeting. We’re seeing a lot of conflicting news reports about whether OPEC will institute an output freeze or cut, so it’s getting hard to gauge the importance of data. I’m long oil (through the KYN and BGR closed-end funds), but I’m not going to hazard a guess as to what OPEC’s going to do. We’ve also got Existing Home Sales and the FHFA House Price Index on tap today. Housing stocks were up huge on yesterday’s big New Home Sales numbers, so maybe there’s action there again today. But I think biotech (IBB) may tell the tale for now. That group’s been pretty strong the past couple of days, and recent history shows that when biotech does well, the bears tend to fail. Good luck out there. P.S. Don’t forget to sign up for Rob Smith’s FREE webinar.
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