Market Strategies Newsletter - Special Daily Edition
For Trading February 28th
RATES FALL TO NEW LOWS
COVID-19 IS THE ISSUE
Energy Still DEVASTATED
Worst Point Loss in History
Today’s market was another dramatic decline. We were down 960 early and then the market made a gallant effort from 10:45 to move higher, eventually getting back to -200 and then the news from California that there was an “unknown origin” case diagnosed which raised to possibility of “community” spread of the virus and we started to sink again. That caused some selling, that was fairly well contained between -200 and -400 until about 2:30 or so when the margin clerks took over and started selling. I know that most people don’t quite get the connection since they don’t really deal with brokers, since they have moved to online trading, but here’s how it “used to” work. You’d get a margin call and your broker would call and you could “bring him / her a check.” There was a relationship between the parties and if you did what you said you were going to do over time (relationship) you could do that. Now, there are no relationships between the broker (who even has one) and if the money hasn’t been wired in to the firm, you’re sold out. It’s not a limit order that may or may not get done, it’s a market order given to a machine.
So, the bottom line was that the DJIA had its worst day in history -1190.95 (4.42%), NASDAQ -414.29 (4.61%), S&P-500 -137.63 (4.42%), the Russell -54.89 (3.53%), DJ Transports, the only one that actually traded higher mid-day, closed - 356.45 (3.62%). Today’s loss was the worst point loss, but well below the 22.6% decline of October 19, 1987. To put that into perspective, the October 29, 1929 Crash that started the Great Depression was 12.8%.
Market internals were again negative with the NYSE 8:1 and NASDAQ 5.5:1. The DJIA had only 1 gainer, MMM was +8 DPs, and while I usually breakdown the double-digit losers, there were only 2 losers that were NOTdouble digits.
Our “open forum” on Discord, which allows me to interact with subscribers and others to allow direct questions and chart opinions on just about any stock, continues to grow with more participants every day. It is informative and allows me to share insights as the market is open and moving. The link is:https://discord.gg/ATvC7YZ and I will be there and active from before the open and all day. It’s a great place to share ideas and gain some insights.
SECTORS: Other names in the news:It was another tough day and I’m going to depart from my normal listing of all the stocks in each sector and just give a highlight of a few of the biggest gainers (yes there were some). As you can imagine, they were mostly Biotech. The first is Co-Diagnostics (CODX) which started higher last month from a low of $ .88, and by mid-January had already traded $4.24. The real action started yesterday when it close $8.90 +4.58 (106%) on the news that it was making progress for a COVID-19 test. Most of the news today centered around an offering they were doing but mostly it was repeated trading halts and resumed for volatility. By the end of the day it had traded $19.67 and closed $15.96 +7.06 (79%). It’s currently $16.90 +2.01. Alpha Pro Tech (APT) is a maker of Face Masks. It was halted this morning when it disclosed an order for its N-95 mask for Coronavirus. As with CODX, it started in January at $3.42 and on Monday it was $7.14 +1.44 (25.26%), but move higher this week to trade $27.50 before closing $25.25 +12.86 (103%) and has moved higher tonight to $33.61 and is currently $33.10 +7.60 (29.8%).
Last night I wrote up Moderna Inc., (MRNA) who shipped its first batch of an experimental vaccine to NIAIC, and the stock was up yesterday to $23.76 +5.17, continued today to a high of $29.98 and finished $29.16 +5.40 (22.73%). Today it got a bit ahead of itself and after trading $36.00 fell back to $23.05 and finished $26.16 -3.00 (10.29%) and has gained a bit tonight to $27.98. Gilead (GILD), also a vaccine producer that had moved higher really took off today closing $74.70 + 4.60, but announced its own Phase-2 trials and had a great run also to trade $78.88 before getting coverage by Barclay’s at underweight and a price objective of $62.00. In Bio, but not COVID-19 related was Forty-Seven, Inc., (FTSV) a clinical-stage immune-oncology company announced yesterday that they were going to present at a Cowen conference next week. That’s it, no specifics but the stock, which close $48.79 +.49 but in extended trading has hit $77.00 and is currently $62.60 +13.81 (28.3%).
Now comes the departure from my normal format. This afternoon, after the close I heard Jeremy Siegel from Wharton speaking about the markets. He has been bullish for as long as I can remember, and he was saying that due to the current issues, that he felt that they would cut back on capital expenditures “Cap-ex” spending. Is he kidding? I have been railing about the fact that there has been NO Cap-ex spending at all and that I was tired of the constant lowered expectations that were reported as “beats.” I can’t even count how many times I’ve said “a beat of lowered expectations in NOT a beat.” And, buybacks produce nothing in the way of productivity gains or any competitive advantage. While I’m not a “the CEOs have to be stopped,” it has clearly come home to roost. You can’t increase productivity (cut payroll) without spending any money on plant and equipment and expect to have a supply chain 6000 miles away that has a problem producing and expect to maintain your business.
I did a little buying this morning in TEVA, and while it closed a touch lower, it took no time for it to run up 5% with any let up in the selling.
BIOPHARMA:wasLOWERwith most down around the same as the market AROUND 4-5%. LABU was the biggest loser -6.05 (12.26%) and the IBB $112.99 -5.27 (5.37%).
CANNABIS:stocks wereLOWERwith several down in double-digit percentages. The biggest losers were NBEV -.33 (14.8%) and PYX-.50 (12.32%). KERN, the maker of compliance software was - .51 (6.46%) and the ETF, MJ $14.18 -.76 (5.09%). I believe this group is broken and it will be a while before any of these are investable. Not untradeable, but uninvestable!
DEFENSE:wasLOWER AGAINwith most lower by 3.5 to 5%, and ITA $203.75 -10.23 (4.78%).
RETAILwasLOWERand the brands were the weakest. DDS was the biggest loser -5.04 (8.57%) and LULU on the brand side was -18.56 (7.78%). XRT was $40.54 -1.17 (2.81%). XRT $41.71-.98 (2.3%).
FAANG and Big Cap:were the BIGGEST LOSERSwith GOOGL -78.72, AMZN -109.59, AAPL -21.75, FB -8.92, NFLX -6.74, NVDA -15.99, TSLA -123.78 (15.9%), BABA -3.84, BOIDU -3.99, IBM -7.36, BA -19.49, CAT -5.35, DIS -5.51, BOX +.30, MSFT -11.99 (7.05%) and XLK $87.70 -5.00 (5.39%).
FINANCIALS wereLOWERwith the fall in rates, GS -10.09, JPM -5.64, BAC -1.55, MS -2.04, C -3.74, PNC -8.06, AIG -1.75, TRV -5.08, AXP -6.00 and XLF $27.33 -1.22 (4.27%).
OIL, $47.09 -1.64. Friday we were down early and closed better and I thought we had held $52. Today, we were lower again and the break below $46 was a disappointment. I’m still bearish, but it’s difficult to be a seller down here. The stocks wereLOWER with the XLE $45.31 -2.56 (5.35%).
METALS,GOLD: $1,642.50 -.60.After the breakout run to the high of $1691.70 yesterday it gapped down and traded 1626, another new lower low of 626 before a close mid-range again. Tonight we are +1.50. I still want to get on the long-side again.
BITCOIN: closed $8,890 + 110.We broke to the upside to hit $10,620 last week and have had daily rallies and sell-offs, but the weekly is on support and I think we will move higher. Today’s action puts that in question on the Daily, but the weekly is still okay. We own 750 GBTC with an average of $8.89. GBTC closed $10.53 + .17 today.
Tomorrow is another day.
Subscribers to The Moskowitz Report
Receive free texting of all new or
closing trades with their subscriptions
GO TO: www.GreatWizeOZ.com TO SUBSCRIBE or for questions