I suppose only liars or the lucky (my goal) would actually hit an exact bottom after this kind of a swoon, but man this is looking close to me!
Besides the compelling valuations, the extreme liquidation by biotech mutual fund holders is signaling classic and rather mindless "afterthought selling" crowd psychology. It's almost as if they see these on their statements and think (derisively), "I own that?" and then "I'm not supposed to".
Rydex BTK:
8-07-00 was 685.0m
10-27-00 600.0 m
1-02-01 was 511.0 m
7-01- 2001 was 433.9m
10-17- 2001 was 289.5m
1-30-02 was 267.8m
4-6-02 was 217.0
5-3-02 was 179.3 m, a full 58.7% reduction in fund assets from just 10 month ago and 74% from the bubble top. That's a major, almost epic sector capitulation. I'd say we are very near the point where everybody who has thought about selling this has sold.
An example of what happens when a sector gets completely out of favor and neglected: Rydex Precious Metals
7-1-01: 27.2
10-17-01: 55.4
1-30-02: 71.7
4-6-02: 70.6
5-3-02: 74.7
Nice bounce/powerful rally, and the most rewarding sector to have owned during the period, but still not too terribly popular: many nonbelievers.
Back at the biotech casino, specialists refuse to make a market in the stocks. From the AM action so far:
CRGN down 35 cents on a whopping 149,500 shares
IMGN down 44 cents on 73,700 shares
Or how about HYSQ, down 18 cents (4.77%) on 10,400. |
