Bio Bull

The Bear put a headlock on the Bull as we head into a traditionally strong pre-holiday week. 

Bias here has gone down to a cautionary Yellow Flag. Recent Growth Stock breakouts are working, though road signs flash warning as the uncertainty of a pandemic looms. 

For the Week: 

  • The S&P 500, -2.42% 
  • The Nasdaq, -2.59%
  • The Dow, -2.84%

Don’t look too much into the selling. Despite two clear distribution days, the bias here won’t shift lower as long as leadership and price action hold up above the major moving averages. 

Technology continues to pull action higher, though most other sectors continue to struggle under the 200-day averages. 

Lighter volume for the NYSE and Nasdaq was’t panic motivated, and was long overdue as a consequence of an “over bought” market. 

The coronavirus battlefront threatens further economic impact. Rising infection and hospitalization rates in some regions will thwart business. To what degree is uncertain.  

The Fed showed concern for banks when Friday it instructed them to preserve capital by putting a hold on buybacks and paying dividends. Continued high unemployment is worrisome, and will need to be resolved before stimulus wears off. 

Another round of government stimulus may very well be in the works, which would be a big boost to market sentiment. 

Next week will be a day shorter as the U.S. celebrates the Fourth of July

It’s window dressing time. Quality names are well bid as being as portfolio managers look to impress customers with their holdings.

Small caps will likely benefit from the annual Russell 2000 realignment on June 29, as well as the 90 day ETF realignment to end the quarter.

The best thing the Bull has going for it is names from the Dow paying dividends four times greater than the 10-year Treasury notes. Smart money will gravitate to this.

LEADERSHIP

The semiconductor index (SMH, -1.87%) is flirting with a failed breakout. Action here is key to the broader market’s direction.

Watch for any weakness in the internet (FDN, -2.01%) and software (IGV, -0.88%) indexes. The Bull has been led from its March lows by these stay at home friendly businesses. Any faltering could pull major indexes in the southern direction that the energy, finance, retail, industrial and transportation stocks have been leaning toward. 

Facebook (FB, -8.32%) and Google (GOOG, -5.65%) took dip down to their 50-day moving averages this week, breaking their upward drifts. 

Meanwhile, this group of stellar tech names continues to hold bullish form: Apple (AAPL, -3.07%) Amazon (AMZN, -2.24%), Netflix (NFLX, -4.83%) and Microsoft (MSFT, -2%.)  

Gold (GLD, +0.45%) remains near highs. The biotechs (IBB, -2%) continue to produce a multitude of growth stock breakouts. See below. 

TECHNICALLY SPEAKING

  • The S&P 500 is lacking a long-term trend as the 50-day moving average tracks slow the 200-day MA.
  • NYSE volume for the week was 5% lighter than last week, and favored the bears with a 0.6 ratio of buyers to sellers. 
  • Nasdaq volume was 15% higher and showed an even 1 ratio of buyers to sellers.
  • Declining issues dominated for the NYSE and Nasdaq with advance/decline ratios of 0.3 and 0.4 respectively. 

GROWTH STOCKS

Growth Stock breakouts are holding, though we’re seeing some erosion in these quality names as fewer appear to be on track for new buy setups. 

Fresh breakouts in biotech show optimism for the industry as the pandemic takes  center role in the healthcare sector. 

Breakouts

PFSIPennyMac Financial Services, Inc.Finance/Rental/Leasing
PLMRPalomar Holdings, Inc.Property/Casualty Insurance
ZMZoom Video Communications, Inc. Class APackaged Software
AMRCAmeresco, Inc. Class AEngineering & Construction
CHGGChegg, Inc.Miscellaneous Commercial Services
IPHIInphi CorporationSemiconductors
TTDTrade Desk, Inc. Class AAdvertising/Marketing Services
VAPOVapotherm, Inc.Medical Specialties
ALNYAlnylam Pharmaceuticals, IncBiotechnology
CGENCompugen Ltd.Biotechnology
IMMUImmunomedics, Inc.Biotechnology
OCULOcular Therapeutix IncPharmaceuticals: Major
CRSPCRISPR Therapeutics AGBiotechnology
CRWDCrowdStrike Holdings, Inc. Class APackaged Software
EXPIeXp World Holdings, Inc.Financial Conglomerates
TWSTTwist Bioscience Corp.Biotechnology
AEYEAudioEye, Inc.Internet Software/Services
RAREUltragenyx Pharmaceutical, Inc.Biotechnology
WRTCWrap Technologies, Inc.Industrial Conglomerates
CDNACareDx, Inc.Medical Specialties
ALBOAlbireo Pharma, Inc.Pharmaceuticals: Other

Bases

NBIXNeurocrine Biosciences, Inc.Biotechnology
NTRANatera, Inc.Medical/Nursing Services
XLRNAcceleron Pharma IncBiotechnology
BYNDBeyond Meat, Inc.Food: Major Diversified
PAASPan American Silver Corp.Precious Metals
TNDMTandem Diabetes Care, Inc.Medical Specialties
STNEStoneCo Ltd. Class APackaged Software
LGIHLGI Homes, Inc.Homebuilding
PAYCPaycom Software, Inc.Packaged Software
DRNADicerna Pharmaceuticals, Inc.Biotechnology
ZZillow Group, Inc. Class CInformation Technology Services
IIPRInnovative Industrial Properties IncReal Estate Investment Trusts
SILKSilk Road Medical, Inc.Medical Specialties
SWAVShockwave Medical, Inc.Medical Specialties
OROsisko Gold Royalties LtdPrecious Metals
AKCAAkcea Therapeutics, Inc.Pharmaceuticals: Major
EXASExact Sciences CorporationBiotechnology
KERNAkerna Corp.Data Processing Services
DRNA: Always good to see strong buy-volume prior to breakout.
PRTK: Another biotech with strong fundamentals in a sound base.

Stay safe,

Dan