With a sea of red engulfing the markets Tuesday morning, there was plenty to discuss on the PreMarket Prep Show.
When Red Is Not Red Enough
Although the S&P 500 index futures were in the red at the top of the show, co-host Dennis Dick insisted they weren't red enough. The reason being that major stocks that comprise the index were trading much lower on a percentage basis.
In other words, one of two things had to happen to solve the discrepancy on or before the open: Stocks had to rally or the index had to come down even more.
On this occasion, stocks didn't rally during the broadcast and the index shaved nearly 30 handles from the start of the show until it found buyers 20 minutes into the session.
Where To Hide?
One characteristic of this bull market has been noticeable rotation among sectors. When money managers are exiting one sector, they're putting funds to work in another. For example, when growth stocks fall out of favor, investors may turn to value stocks to employ a more conservative approach.
As of late, funds have been moving into the biotech sector as some of these companies have been gaining approval for blockbuster drugs and their share price has responded in kind.
Also, more established pharma has been on the prowl for growth and instigated some takeovers at some juicy premiums. Before the open, Audentes Therapeutics BOLD was acquired by Astellas Pharma Inc. ALPMY at a 100% premium to Monday's closing price ($28.61) at $60 per share.
While most of the sectors are deep in the red, the iShares NASDAQ Biotech ETF IBB was flat on the day while SPDR S&P Biotech Index XBI is higher by nearly 1%.
When Laura Martin Comments On Roku, The Street Listens
When Roku Inc. ROKU shares declined 15% on Monday ($160.27 to $136.07), many were expecting follow-through in Tuesday's session. Not so fast.
Long-time Roku bull, Laura Martin of Needham came out to defend the issue and identified a potential "buy the dip" from opportunity. She maintained her Buy rating and increased her price target from $150 to $200.
While the Street was leaning to the short-side based on Monday's price action and the weakness in the broad market, her commentary turned the tide.
After a higher open, Roku had a brief retreat but found support just ahead of Monday's close ($136.07) at $136.57 and traded to $145.89 with just under four hours remaining the session.
Nic Chahine Joins The Show
Midway through the broadcast Nic Chaine, author of Create Income With Options Spreads joined the broadcast. Nic surveyed the damage from Monday and urged investors to view the retreat as a potential buying opportunity.
At 8:35 a.m. EST on Wednesday, Jake Wujastyk of The Trend Spider will be our guest. There will be an additional hour of market coverage when Sean Udall of Quantum Trading Strategies shares his picks and pans.
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