I Bubble Bubble

After catapulting to an eye-watering all-time high last week with catalysts coming from mergers and component companies’ positive drug test results, the IBB biotech index suffered its biggest loss in months, dropping 4.1% and dragging the Nasdaq down to a 118 point plunge, the biggest one in almost a year just after it finally breached the 5,000 level for the first time in 15 years since the tech bubble burst. Semiconductors also got slammed and were the other contributing factor to the Nasdaq nosedive. BIS has been an excellent trader to capitalize on this biotech correction, having bounced off an all time low of $29.18 last week. I managed to pick this up at $30.40, sold at $32.00 and got back in at $31.55. I scaled out again today at $34.55 and $34.10. It closed strongly but I am expecting a bounce in the IBB before we see whether the trend has actually reversed or if this is just a correction.

Interestingly, steels (AKS, X, STLD) bucked the trend (or at least outperformed the indexes) and continued to bounce after getting hit by lower guidance last week.

And just when you thought crude oil was going to have a quiet day after barely a peep on larger than forecast inventories, it staged a huge rally right before the final hour of pit trading at 13:20ET. GASL was a major beneficiary of this turnaround, up 8.8% to hit a multi-week high of $3.21. After hours crude leaped another 5.4% to $51.91 on news of Saudia Arabia launching airstrikes in Yemen.

FB faltered after a 7 day winning streak that tacked on 10%, briefly dropping below $83 before recovering slightly as Mark Zuckerberg kicked off the F8 2-day developer conference. There has been a lot of bullish call buying in this name in recent weeks and we will see if that continues. I closed some puts at a tidy profit this morning but sold far too early it seems, and started nibbling on some calls.

And it seems like every day is Friday for AAPL these days, as it suffered a massive $3.31 gutting on seemingly no news. Unfazed, some bullish posters on StockTwits continue to call for $130+ within a few days. I guess if you consider a +$0.30 bump in after-hours ‘panic buying’ and ‘shorts getting annihilated’, then anything in your mind is possible…#hopespringseternal. Also took profits on puts here and opened some calls, so let’s see if we get a bounce off these levels.

As always, trade well and stay disciplined!

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