Friday's sell-off, coupled with the pre-market rebound and the implications of it were discussed at the top of Monday's PreMarket Prep Show.
Just What The Markets Needed
On many occasions, a big move on a Friday in either direction can lead to a continuation move in the same direction on the following Monday. In view of Friday's decline, many market participants were expecting follow-through on the downside in today's session.
However, no major negative news regarding the coronavirus coupled with the Chinese banning of short selling instigated a major rebound from Friday's close and it has continued in early trading.
The co-hosts of the show are once again utilizing the rally as a potential hedging opportunity for their long-term portfolios..
Gilead Traders Getting Overzealous In PreMarket Trading
Late in the day on Friday, it was reported that Gilead Sciences (NASDAQ: GILD) was working with China to determine if its Remdesivir drug can be used to treat the coronavirus. Amidst the broad decline in the markets, that news did not attract buyers to the issue as it ended Friday's session in the red at $63.20.
That was not the case in the after-hours session that lasted until 8:00 p.m. on Friday as buyers nibbled on the good news, rallying the issue to $65.37. Then came the announcement on Sunday that the case treated with the Gilead drug may spur wider tests.
That was music to the ears of the buyers in the after-hours session as the issue raced all the way to $77.70 at the open of pre-market trading at 4:00 a.m. EST Monday morning on good volume.
Co-host Dennis Dick, who saw the after-hours news but declined to act on it, was shocked by the oversized move for a few different reasons. First of all, Gilead has been in a prolonged downturn since July 2015 when it peaked at $123.27 and although this was a potential catalyst, it did not justify a sudden 20% rally.
Dick also noted the issue has an average daily trading range of roughly $1.50, so a sudden $12 surge would be met by anxious sellers of the underperforming issue. The issue did trail off for the remainder of the premarket but still managed to open $4 plus in the green. It continued higher before peaking at $68.68 and then reversed course. Since the reversal, it has continued to make news on the session is almost back at Friday's afters-hour close of $65.37.
Sean Udall Surveys The Markets
Midway through the show, Sean Udall, CIO of Quantum Trading Strategies joined the show. He commented on the recent decline in the markets and discussed several issues on his Buy and Sell radar.
At 8:35 a.m. EST on Tuesday, Todd Gordon founder, of Tradinganalysis.com will be guest on will comment on the recent market volatility. Todd will also tell us about his move into the RIA business as a money manager.