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Market Notes: Biotech Booms, GoPro Slams Shorts

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Here's what the Buzz & Banter team is watching this morning.

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We're seeing some wild action today.

Check out the VIX -- it had quite the big bang at the open, rising as much as 15% before sagging.



As seems common lately, are we seeing traders bid too aggressively for protection when downward momentum starts hitting?

I think so -- the relief rallies on Wednesday and Friday were preceded by enormous spikes in the VIX and VXST.

The star of the day is Biotech (NBI), which was down 1.3% in the early going before ripping higher. It's now up 0.4%.

That, and the turnaround in Apple (AAPL), which took an early hit on EU tax concerns, has the S&P 500 back squeaking back above the 50 day moving average.



Moves through the 50 saw momentum boosts on Thursday and Friday -- will today be three in a row?

The up move in biotech is also buoying the NASDAQ Composite (COMP), which just turned green.

On the negative side, the high-yield ETFs HYG and JNK are off the morning lows but uncomfortably red.

The Russell 2000 is showing just a wee bit of relative strength but nothing to get excited about.

PIMCO closed-end funds are mostly down, though again, many are still trading at premiums to NAV, and they're off the lows of the day. There have been reports circulating about outflows (Bill Gross himself has a good deal of money in them) that are hurting sentiment, though I suspect there will be a buying opportunity in these funds as a result.



Finally, I'll give big props to Fil Zucchi [subscription required] for highlighting the absurd skew in GoPro (GPRO) options last week (translation: shorts were about to get whacked), a story that is now really catching fire.
 
Put buyers are caught leaning the wrong way, making for a brutal short squeeze. The stock is absolutely ripping and I'm kicking myself for not taking a flyer.

Just look at the difference in implied volatility on the calls and puts. I can't remember if I've seen anything like it.



Twitter: @MichaelComeau

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