BIOTECHS continue the 2 day romp…up on average 6% this week. Biotechs with substance (sales and earnings) as well as biotechs with nothing (not only no earnings but no sales) are big to the upside. A glance at the IBB or BBH show new high ground has been taken intraday. This is both meaningful to the group but also meaningful to the NASDAQ/NDX. This whole group should be on your screen for entries once things calm down. Leave no doubt, this is a beta group which potentially augurs well for overall markets. When beta is humming, it usually is a good thing. But as of this second, it still remains a very split tape.
We suspect this move was set off by the buyout of KITE by GILD. KITE’s purchase was for $11 billion cash even though no drug has hit the market yet and the company loses a ton of money. Go figure! GILD stock (the acquirer) is also moving strongly to the upside off of this. Is this a sign of a frothy market? One can make that case but to us…JUST WATCH PRICE ACTION!
Pay no attention to the Dow which is actually down a point. NASDAQ up 36…NDX up 39. AND:
BIOTECHS lighting up like a pinball machine. KITE was bought out on Monday for $10 billion even though no drugs to market yet. That is lifting the whole group. Many hitting screens today.
SEMIS up nicely. As we have told you, market has literally no chance to get smacked if SEMIS are working. The SOX is in the 12th week of a new base since it topped out June 9th. The pattern is wide and loose but could tighten up.
TRANSPORTS 2nd straight strong day after holding support yesterday. The TRANSPORTS in a 9 month range…and has rallied back into the middle of it.
Much better tone this week…but remain in very choppy action.
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Futures up a wee bit. Good reversal yesterday as major indices defended at or near support. Transports had an important day as they have been week. You can see the 8900-9000 area remains a vital area of support.
Keep in mind a couple of things:
It is end of month window dressing time even though it is illegal and does not happen.
More than half the market aint happening thus one needs to be sector and stock specific more now than in the recent past.
Flop and chop seems the name of the game in here as lows hold but been tough to get a foothold on the upside. There is nothing wrong with sitting for a while…as long as major support is not taken out.
ADI with decent gap to upside in the SEMICONDUCTOR space. DY is gapping down.
When they gap it down on supposedly bad news and buy it up…it is good news.
When the worst areas like TRANSPORTS get defended at support, it is not bad news.
When leading growth names remain tight, it is good news.
When major support cannot be breached for major indices, that is good news.
That said, it is still a 40ish-60ish market. But gotta be happy they had a chance to do damage today and not only could not, but things were bought up. Then again, it is the end of month window dressing…which does not happen because it is illegal.
I am sure we just gap up a bit tomorrow and then sell off. (sarcasm) Expect more whippy action but we will take today as a positive.