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Earnings get a bit less boring with a slew of biotechnology and medical device names out Tuesday, most of them after the closing bell.
Among those that will be most watched are Gilead Sciences, sort of the linchpin of this whole selloff the market's been dealing with in the last several weeks, Illumina, one of the market's biggest high-flyers in the last couple of years, and Amgen, which compared with these biotechnology names might as well be a telephone company in terms of volatility and overall sex appeal.
The declines in Gilead and other biotech names have been striking, as the stocks have underperformed the S&P 500 by double-digit levels since the full-scale run out of these names began late in February. Unfortunately the options market suggests the action after the closing bell (or even through the end of the week) might be a bit underwhelming. Ryan Detrick of Schaeffer's Investment Research notes that the amount of bullish call buying compared with put-buying (bearish bets) in both Amgen and Gilead ranks at about the 55th percentile over the past year.
For Gilead, that means over the last 10 days we've seen about 218 call options written for every 100 put options, a healthy but unspectacular bit of action that points to generally bullish tidings. It's certainly not something that suggests worry among investors after Gilead has been one of the market's duds since late February, and especially since mid-March when lawmakers asked the company to justify its $90-gazillion price tag for its hepatitis C drug.
Markets head into a busy week of earnings with a bit of uncertainty around whether the major companies out there will help continue the momentum in the stock market that was regained last week after some weeks of lackluster trading.
As put in Reuters' Wall Street Weekahead, there's something for everyone this week, from the old-line tech companies like Microsoft that have been the recent beneficiary of the switch away from the high-flying names like Netflix and Facebook (which also report this week) to some big industrial names like General Motors - which has plenty of its own issues with the recall - to Dow components like AT&T and McDonald's.
The markets have remained interesting this week as earnings season has ramped up, but the most interesting index remains the Nasdaq Composite.
The Nazz continues its upward swing following Tuesday’s volatile, deep plunge; it has now gained more than three percent in the brief period between the lows it hit Tuesday and the Wednesday close. That's a pretty short period of time to see such a dramatic move in the index but doesn’t necessarily point to better tidings ahead. Bespoke Investment Group pointed out that when swings like this are usually seen – there have been 18 such occurrences since 2000 – it doesn’t bode well for the tech-heavy index.
Same-store sales figures may be enough to inspire some investors to resume paring portfolios of some consumer discretionary stocks that have underperformed in the last five or six weeks.
Equities rebounded on Tuesday, but the overall feeling is that the market hasn’t yet finished with the bout of selling infecting the high-volatility, high-beta names that dominate conversations.
Most consumer names aren’t in this rarefied air (they don’t trade at price-to-sales ratios of a gajillion) but they’ve still been a target for some time on bad news.
Lots of stocks have been getting killed in the last several weeks and the declines don’t seem really like they’re set to abate headed into a week where news is again at a premium (sure, earnings, but it’s just a few names, and they’re mostly decidedly not in this category of the momentum names that fueled the rally in 2013). So the likes of Facebook, Tesla Motors, Netflix, Alexion Pharmaceuticals, and a bunch of others have seen their fortunes turn in the market. But at this time we thought it would be a good way to get into this topic again by trying to lay out just what the hell a momentum stock is in the first place, because they exhibit a number of characteristics beyond just “a stock that’s going up very high.” So here goes:
Growing Industries: Internet retail, internet security, solar, cloud computing, companies that use the cloud for providing services (think Salesforce.com), biotechnology, and anything else where the prospects for growth are big and related to a growing sector of the economy. Utilities don’t really qualify here, naturally. The reasons are two-fold: for one, in order to jump onto a rising growth story, you’d want to be in a place where the expected future returns outpace the returns you’re getting now, something you won’t get from the telephone company, someone who sells toothpaste, or the guys hooking up the electricity.
from Global Investing:
It's a brave investor who will venture into emerging markets these days, let alone start a new fund. Data from Thomson Reuters company Lipper shows declining appetite for new emerging market funds - while almost 200 emerging debt and equity funds were launched in Europe back in 2011, the tally so far this year is just 10.
But Shaw Wagener, a portfolio manager at U.S. investor American Funds has gone against the trend, launching an emerging growth and income fund earlier this month.
The markets are still a few weeks away from the earnings season (didn't the last one just end?) but there's an early - or late, if you will - precursor to all of that with Oracle's results due out after the closing bell on Tuesday.
Whether it's a harbinger of what to expect for technology companies remains to be seen. But as a company with substantial revenue coming from the Asia-Pacific, it's going to be closely watched to see what kind of toll slowing growth in China has taken on demand for technology goods for companies operating in the region in general.
The common refrain, five years after the end of the market's worst performance in decades (excluding the technology arena, yet to recover its highs from the tech bubble), is that this bull market is getting long in the tooth: It's gone too far, too fast, and therefore, is due to end. We examined this in a story by Caroline Valetkevitch, just setting aside the hand-wringing about things ending or not, and throwing out a few things that really get at people. (Full Story)
One of those is the idea that the market hasn't seen a correction in more than two years or so, though there's some semantics here per Dan Greenhaus of BTIG. He notes that the 19.4-percent drop (peak to trough) in 2011 only doesn't qualify as an ever-so-brief bear market by the slimmest of margins, and if you accept the idea that this was a bear, "the current rally isn’t five years old, it's just two and a quarter."
Opinions vary right now as to whether we're seeing the return of bubble-like qualities across a broad swath of the market or just in select names (which really isn't a bubble, then, bubeleh, just overvalued stocks).
With the Ukraine issue subsiding a bit, investors had a chance to sink their teeth back into the market, including a number of areas that seemed ripe for buying, like small-cap names, which saw a very strong 2.6 percent increase on Tuesday that outdid the larger-cap stocks.
United States markets have hit a relatively calm period. Where problems in Ukraine and Russia are giving a modest safety bid to treasuries, the U.S. stock market continues its climb after a better-than-expected earnings season, though concerns remain over the weather's impact on some recent weak economic data.
The more interesting action is taking place in the world of bitcoin, where the biggest exchange Mt. Gox, filed for bankruptcy after several months of dwindling as the most influential exchange in this fledgling market.