Three Metrics Pointing to a Stock Rebound

You're receiving this email as part of your subscription to Lou Basenese’s Trend Trader Daily [Unsubscribe](. [Trend Trader Daily] Three Metrics Pointing to a Stock Rebound Thursday, February 17, 2022 In case you missed my [previous column](, I basically told you to take a Chill Pill about slumping stock prices. Why? First of all, history suggests that the current sell-off is merely a healthy correction and consolidation, not the beginning of a dreaded bear market. And more importantly, I’ve never seen runaway emotions (in either direction) lead to smart decisions or more profits. Instead, we need to always focus on the data. When it comes to predicting when the current stock market slump will end, I’m convinced that specific three data points are critical. Let me explain… > ADVERTISEMENT < [Man Called Tesla at $50, Says Buy This EV Stock]( He saw the writing on the wall before Wall Street did... He pounded the table to buy Tesla at $50, predicting it would go to $1,000. Now he's issued another big buy alert — one that he believes could do just as well... [Click here for the full story.]( Fix Your Eyes on the VIX When fear and panic take over Wall Street, as represented by a surge in the CBOE Volatility Index (VIX), it’s usually a contrarian indicator. By that I mean, despite surging fears, stock prices are typically close to bottoming. The key level to watch here is above 30. Why? Because previous, sudden spikes above this level (like right now) have proven to be turning points for stocks. Keep in mind, too, the higher and faster the VIX surges, the faster and bigger the likely reversal. Case in point: During the first days of the pandemic, the VIX topped out at 85.47 on March 18, 2020. And sure enough, the S&P 500 bottomed three trading days later. Small Science, Big Impact It makes sense that when fears legitimately mount over falling stock prices, speculation disappears faster than a toupee in a hurricane. With that in mind, if we monitor one of the traditionally riskiest areas of the stock market — small biotech stocks — we can get a good gauge of what’s coming next. So what’s going on right now? Well, after suffering a brutal 50% beat-down from the February 2021 highs, it appears the bottom was put in for biotech stocks on January 28, based on the SPDR S&P Biotech ETF (XBI). Consider: The index bounced as much as 18% off the intra-day lows. Be on the lookout for a break above the 50-day moving average at 102.73 to confirm the reversal. I believe that’s imminent, as the price action jives with the latest survey of institutional biotech investors by investment bank Cowen. More specifically, sentiment is clearly shifting, as the majority of respondents, which is a first, believe midsize biotechs are now undervalued. Believing that biotechs are a bargain is obviously a prerequisite before these institutions start buying aggressively, which makes this week’s Trend Trader Pro “Trade of the Week” all the more timely (full details below). But first, we need to talk about the only thing riskier than a small biotech company… Follow the Filings & Pricings IPOs are arguably the only type of investment that’s riskier than small biotechs, as they literally have no trading history. That’s why new IPOs all but disappear during prolonged market downturns. Right now, the IPO market is still trying to thaw out. Consider: - So far this year, only 14 IPOs have been completed in the U.S. versus 56 by the same time last year. - Only 29 companies have filed to go public this year versus 46 by the same time last year. With that in mind, it’s a positive sign that there are at least some deals and filings happening, as there have been months during extreme market sell offs when zero IPOs get done and only two or three companies file for an IPO. One of the best resources for monitoring IPO statistics remains [Renaissance Capital’s website](, which is why I happily keep paying the monthly subscription costs to access the data. But the firm’s free newsletter and information is equally worthwhile for everyday investors. So you should check it out instead of freaking out! Then, consider this fresh investment opportunity…   FOR TREND TRADER PRO READERS ONLY > [LEARN MORE]( < Ahead of the tape… Lou Basenese Founder & Chief Investment Strategist   Copyright © Trend Trader Daily, All rights reserved. You signed up on []( Our mailing address is: Trend Trader Daily 301 S. 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