A slew of earnings hit the market and while earnings for many Biotech stocks were positive the market did not receive them well. Biotech was hit hard led by ALXN and ILMN to name a few. The S&P 500 hit a new all-time high, but finished near session lows as the index stalled out. Stalling is a form of distribution and we’ll need to see how this market pushes forward. Sellers had the upper hand for much of the day punishing many stocks who reported earnings. FFIV and FB were two winners yet finished well off their highs. This is not the type of action you would like to see out of earnings. Not all is lost, but it does highlight we have some caution flags being raised. Despite the caution we remain in an uptrend and will continue to monitor our price indicators.
Despite all the selling in Biotech names the ETF IBB held up relatively well. Volume was lower on the session and the ETF remains forming a handle. ILMN was plane and simply nasty today. While it did hold its 50 day moving average the wild move will certainly increases the odds this stock will become more volatile. BIIB was a bright spot as the stock has held onto its earning gap. CELG remains in its pattern and holding up relatively well. Risk has certainly increased amongst Biotech names and it is important you adjust position sizes accordingly.
Sentiment clearly shows there is such a lack of interesting amongst the retail crowd. AAII Bulls and Bears are essentially equal with more than 40% of the respondents are neutral. We are at record highs, but you’d think the retail crowd would be a bit more bullish. NAAIM exposure index rose one point as bullish bets were increased. The most bearish bet was -50. There aren’t many who are positioned to top tick this market. II survey remains bullish despite falling from 60%. Bears remain under 20%. Sentiment surveys certainly aren’t screaming for a market top despite this market at record highs. Another summer week is almost over with the stock market pushing higher, but experiencing some kinks in the armor. We’ll continue to position ourselves according to our plan and make sure to get out and enjoy the weekend.
