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Strategies & Market Trends : General market lab and commentary

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Nov 28 4:00 PM EST

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From: Robohogs	1/20/2016 11:18:51 PM
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From Biotech Valuation board. This started as a bio piece and morphed. From behind TSCM's paid site, this citation is the crux of the question. Apparently, there is a strong belief by many that bios are a short closed financing window away from disaster. Even the large cap bios as this commentary was in reply to a post about IBB stocks and 2 smaller caps. Three other items before the commentary. 1. Reference to detiorating credit is still too pat. This kind of turmoil will kill things fairly quickly, yes. But not there. While Carlyle re-priced an M&A deal in last few days to appease banks (and itself), there are not the hung financings in nearly the size of past. IG bonds led the rally today. 2. Doug Kass, uber-bear, was short going into today. He is medium long, buying last few days and heavier today. He is calling this a cuccesful test of the lows (assume 2014/2015) and a panic low. 3. Chart at this site, my second favorite behind Fat Pitch and this guy is bearish but less so than one guy I follow, shows we are still in the shite until we prove this low. We are following 2008 moves closely here. This was a relief bounce only UNLESS proven. And that is more important than any sector stuff below. My odds at being proven: slightly above 50/50. I was 80/20 until I worried about the chicken and the egg issue caused by speed of news flow in the modern age. We still also have statement opening blues to come. northmantrader.com From Roger Arnold: The move into the biotech's appears to be part of a move away from the economically sensitive sectors. The gold mines are experiencing a similar rally, even larger, on a move away from the economically sensitive issue into hard assets. The move into the gold mines is rational and prudent I think. The move into biotech's on the idea that they are resistant to the immediate economic concerns is not a good idea. These companies burn cash and need a lot of it. Access to it is likely to become an issue soon. This morning the spreads on fannie / freddie agency debt for multifamily and assisted living facilities blew out even as treasury yields declined dramatically. That is a very worrisome sign for the debt markets and may indicate a trajectory for a rout from debt similar to that which followed the Russian default in 1998, which ended up crushing Long Term Capital Management when the managers failed to anticipate the extent of the flight from risk. Unless the Fed reverses course soon debt defaults may begin to cascade beyond their ability to halt. There's plenty of empirical economic evidence for the Fed to rely on to reverse course now. The question is when will they do so. Any company or sector that needs ongoing access to capital that can't not be sourced internally should be avoided in my opinion. END QUOTE. I will cross-post this on General site as I got away from original purpose here and this is best summary of my current thought process. Jon PS. We were down on mkt. Small cap bios up 5%. IWM held green at end I think. NYMO did not print super low number it could have but still went DOWN. Other indicators line up. This should be a multiple day thing and can only be proven wrong if lows significantly breached in coming weeks. BUT we are still below virtually ALL moving averages in ALL equity mkts.

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