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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Intraday Market Notes: Biotechs Are Burning! -- Sept. 17 0 comments
    Sep 17, 2012 4:52 PM | about stocks: IBB, BBH, FBT

    4:15 pm ET: The QE mania that rallied the market last week seems to have faded considerably. On this lighter than normal trading day (due in part to the Jewish holiday of Rosh Hashana) the market is losing steam as the day wears on. While there appears to be a short-covering rally going into the close, the internals are still on the bearish side with both the VIX and the Trin rising.

    But the biggest bear "tell" is that the Dow Transports (DTX) has abruptly reversed course. Since the DTX is regarded as a leader in market direction, we could easily see the other averages begin to give back last week's gains. Unless there's some unexpected piece of good economic news that crops up, there's little reason for the market to advance as I do believe that all of the current economic data has been digested. I'm not sounding the alarm bell yet as the major averages could spend the next couple of weeks under consolidation. Until a direction is re-established, be nimble in your trades and take smaller positions. Just my two cents.

    Trade of the Day: Biotechs are burning!
    The only sector to reach a new high today was biotech. Here, three etfs--BBH, IBB, FBT--not only hit new yearly highs, but new all-time highs. These baskets of biotechs have been rising steadily since the market's 2009 low with all of them more than doubling in value. And this rally is not showing signs of waning. For all of you options players, the IBB is the only fund with a liquid options field making it a juicy covered call candidate. However, to use this strategy means buying the stock at a hefty $143 a pop, a budget breaker for some. This obstacle can be removed by replacing the stock with a long-term option (at least 6 months out) and writing front-month calls against it. This is known as a calendar spread and unless a stock is really cheap, it's my preferred way of generating covered call income. (Note that covered call strategies are allowed in retirement accounts but you need to convince your broker that you know what you're doing, as well you should!)

    Stocks: IBB, BBH, FBT
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