As recent sessions have demonstrated, the real price of the stock is being set in the "dark pools", where very large blocks are changing hands ... while volumes in the open market are weak. For two days now we have seen the price settle exactly where the "dark pools" have traded, as indicated by the large blocks which cross at the close. This makes perfect sense. If I had bought a million shares @103.06 yesterday in a nonvisible trade - as someone apparently did - and the stock got a ride up with IBB, it would make perfect sense to short the stock into that rally and take my profits. Today's closing price has already been negotiated privately, and we will now wait to see what it is. At the moment, it looks to be moving toward yesterday's 103.06, but I'm guessing somewhat lower.
Checking "market pulse" I now see that the tweeting chorus climbed all over this after the earnings report. But what if you have a longer statement or observation to make? Say, 20 or 30 words.
Note that during the first 3 1/2 hours of trading, the IBB pulled off a remarkable reversal. By 1:00 pm et, it had risen 1.03%, taking GILD along with it. At that point GILD was up 1.13% and had traded 4.5 million shares. By the close, the IBB had fallen off, but was still up .64%. GILD by then was back to 103.06, up .26%, and had traded 8.8 million shares. But of the 4.3 million shares traded during the last three hours, we now see that well over a million shares were in the "dark pools", changing hands precisely at the closing price. It looks to me as if all the buying was done via the IBB, while large blocks continue to change hands at the low end of pricing. In short, no real buyers.
Right at the close, we should see a large block cross @ 103. And perhaps another @ 103.50. That's where they were passing it back and forth today.
Doubling up on a falling stock would be a questionable decision. You are probably thinking, "But if it pops back up, I'll miss it!" It sounds to me as if you are already long enough to benefit from any rally in the stock price.
Frey, I was under the influence of Buchanan's 12 year old Scotch when I posted this. This is a blended scotch which is periodically put on sale at CVS (where I "shop for wellness") for under $30, your Best Scotch Value in my book. The drawback is that it has some kind of dispenser cap which requires you to shake the booze out in tiny spurts - developed, no doubt, for stingy Scots bartenders. (A "double whisky" in the UK is only slightly larger than a single American shot.) The first time I faced this contraption, it befuddled and infuriated me; however, my son-in-law went to his I-phone and found an instructional video. The web is a wonderful thing. I didn't know that the czars drank stout.
"Institutional" ownership is deceptive. If you hold your shares through a brokerage (Schwab, Merrill, TD Ameritrade, etc.) they are held in their name and therefore "institutional" Actually, according to Yahoo!, institutional ownership of GILD declined by about 29 million shares (1.9%) during the last quarter of 2014. I don't know how you hold shares without them being institutional other than stuffing them under the mattress or posting them for sale at some above market price. In the past - I haven't checked lately - short positions were also listed as institutional ownership. So some widely shorted stocks would show more than 100% institutional ownership. (e.g. Herbalife currently shows 128% of the float held by institutional and mutual fund holdrs.)
(cont.) So what were those large "dark pool" trades" about? Half a million shares yesterday and another 400k or so today at a dollar lower. Did Fidelity Bio Ultragrowth (all fund names fictitious) pass off some shares to Fidelity Stodgy Growth and Income? There are a lot of institutions anxious to tiptoe out of this one, I think. Nevertheless, I also think that Gilead is a formidable company (Note my quaint avoidance of "amazing" and "awesome".) They made a mistake in letting ABBV into the HepC business, and, I think, another mistake in announcing the dividend and buyback on the heels of a disappointing earnings report. (in terms of projections, not earnings) As I have opined here before, I think the pharmas are ready to sell off again. Since I have some positions which I'm disinclined to sell - companies which could be acquired - it makes sense to me to hedge these positions with some shorts. So I am shorting GILD and AMGN at the moment. Which no doubt colors my interpretation of events. My real message is that this is a stock which is worth what the market says it's worth. It's silly to believe that only we have recognized some huge undervaluation here. Therefore, I would be cautious about putting all of my eggs into this one particular basket.
TR, Raleigh, and others here are obviously more into technical analysis than I. (This is a subject upon which I am profoundly ignorant). When trying to discern a pattern, everyone tends to see what they want to see. My own perceptions are colored by a lot of cynicism about the behavior of MM's and investment banks. I will start by saying that when the company reported that the effective discount on Sovaldi/Harvoni was not the 25-30% which had been projected as a worst case scenario, but 46%, this was a seachange. When the company announced a large buyback and the institution of a dividend, this confirmed the change. Several analysts subsequently lowered their price targets by $5 (yes, a couple actually raised their pt). But there was no serious damage done until Credit-Suisse actually downgraded the stock and provided detailed projections. Last week, the stock seemed to rebound. However, my observation has been that when large entities are trapped in a bad position, rather than sell the stock, they buy and walk it down at leisure. That is exactly what happened last week - at the open, the MM's bought a small number of shares at the market, spiking it up and getting the retail investors excited. After which they pinned it in place and sold or shorted the stock. If you had put in a GTC short order above 105, those orders would have filled in the first half hour and you could have made money every day but Friday, when it couldn't quite breach 105. (The illusion that the stock is about to break through 105 is key to selling the March 105 calls, which is the easiest least disruptive way to short the stock.) The shrinking volumes showed that the retail investor had no more dry powder and that there were no other buyers. Those large dark pool trades accounted for about half a million shares of the volume in the last two days, today's block going off at a dollar lower than yesterday's. (cont.)
I think this would be a good time to consider diversifying out of that heavy concentration on pharmas, Raleigh. Incidentally, I believe this stock was being heavily shorted today @ 130.
If this stock is indeed under accumulation, how do we explain the extraordinarily low trading volumes in recent sessions, which is not paralleled by similar drop-offs in CELG or AMGN, the other main factors in the IBB? My own belief is that the institution of the dividend and buyback on the heels of the disappointing news about discounting transform this from a growth stock to a value stock. In spite of all the happy talk here about these events, I think few of us bought this stock for a 1.7% dividend and the prospect of steady earnings bolstered by stock buybacks. In my opinion, the stock will have to find sponsorship among a new class of shareholders. Or find a new drug.
If you don't review and acknowledge your mistakes, you don't learn from them. One of my major mistakes last year was to see the biotech selloff coming and not really do anything about it other than to sell some things. I should have shorted a portfolio of biotechs - shorting any one is too potentially dangerous.
I would suggest that volume is low because the only folks buying this are those who are enticed by the MM's fast runups on low volume at the open. Or daytraders. Retail investors won't sell because they are convinced it's about to break through 105. But institutional investors won't buy because they are befuddled by the 180 degree turn from a growth company to a dividend-paying, stock buyback play. (As the company acknowledges, all the projected growth in per-share earnings over the next few years comes purely from the anticipated stock buybacks.) In the absence of a major new product announcement, this should go lower. Undoubtedly, they will push it up towards 105 again tomorrow - perhaps even above there. But next week we may see the lack of buying interest begin to be reflected in the stock price.
By my calculations, the increase in the price of PCYC today was worth a $1.29 increase in the price of IBB. PCYC is only 2.25% of the IBB. But it was enough to take GILD from 104.12 to 104.93 in minutes. Obviously, people bought the IBB to capture the gains of PCYC, which automatically meant that the IBB had to buy more of their top holdings: BIIB (9.67% of IBB), CELG (7.96%), and GILD (7.67%).