The Fate of The Russell Depends on the Biotech Sector - That's Not Good
It is going to be an exciting day for the stock market with the Russell fate dependant on the biotech sector, could it get any worse?

The Fate of The Russell Depends on the Biotech Sector – That’s Not Good

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August 28 – Stock mentions: SPY, IWM, XBI, BAC, C, USB, JPM, WFC

US Markets

  • S&P 500 Futures +3.25 points
  • 10-Year Yield 1.47%
  • Dollar Index 98.09
  • Oil $55.77
  • VIX 20.5

International Markets

  • KOSPI +0.86%
  • Shanghai -0.29%
  • HSI -0.19%
  • Nikkei +0.11%
  • FTSE +0.25%
  • DAX -0.76%

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S&P 500 (SPY)

S&P 500 is pointing to a flat opening, with 2876 act as strong resistance for the S&P 500 futures. Again not much has changed with upside resistance 2900 and downside support around 2825.

spx, sp500

Russell (IWM)

The Russell should be the primary focus today, as a break down would be a negative sign for the S&P 500 as well. We will want to see Russell stay in a region above 1450 to 1455.

russell

And after looking through the top weightings among the Russell 2000, it became rather clear to me that perhaps the biotech sector may be the key to where the Russell 2000 goes. One can see in the next chart how closely correlated the two are. I’m not sure that we want to have to depend on the biotech sector these days, as the group’s performance has been rather horrible.  Plus it will take just a single thought by anyone in politics to have about drug pricing to get the sector falling.

biotech, russell

Dumping the banks

The financials are going to continue to struggle too, as the yield curve inversion continues to steepen. I continue to believe that the cycle is around the lows, and is likely to start reversing higher.

For now, the banks are the group to avoid. I don’t want a thing about buybacks, the group has gone nowhere despite the buybacks, they have meant nothing so far.

Citigroup (C)

Citigroup is one such stock that has approached a break down towards a gap fill at around $58.50.

citigroup, c

JPMorgan (JPM)

JPMorgan is nearing a breakdown that could send it to $101.90.

jpmorgan

Bank of America (BAC)

Bank of America to $25.75

bank of america

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Wells Fargo (WFC)

Wells Fargo to $43.25

wells fargo

US Banc (USB)

And US Banc to $49.50

usbancorp

That was easy.

-Mike

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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.