Stock futures plunge with sharply lower open expected

February 11, 2016 6:32am

There seems to be no end in sight for volatility as the stem, cell and gene therapy regenerative medicine sector’s frequency analysis is experiencing more random outcomes

Today’s “cheat” sheet, Thursday’s indications. Subscribe … http://www.regmedinvestors.com/create-account ...  

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Investors have temporarily lost their compass; RegMed Investors’ provides metrics of pricing and their differentials. 

DOW futures are DOWN -1.7% and NASDAQ futures are DOWN -2.1%.

U.S. stocks were set to continue the recent selloff on Thursday, with futures tumbling early premarket amid a wider global flight from risk assets.

European stocks were sold off sharply on Thursday, tracking a wider stock-market exodus, as investors once again fretted over global economic growth and the rout in oil prices. The Stoxx Europe 600 index (SXXP) slumped 4%, setting it on track for its lowest close since Oct. 2013. A 4% drop would also mark the worst trading day since August last year, when the pan-European benchmark slid 5.3% on jitters over China.

Asian markets closed mixed on Thursday as investors digested remarks from Fed chief Yellen and oil remained volatile. Hong Kong's Hang Seng index, which resumed trading today after being shut from Monday through Wednesday for the Lunar New Year holiday, fell 3.85%, hovering at levels not seen since Q2/12.  In South Korea, the Kospi re-opened lower after its three-day holiday, and finished the session down 2.93%. In Australia, the S&P/ASX 200 see-sawed between positive and negative territory before finishing up 0.95%

Data docket: Fed chief Yellen will speak before the U.S. Senate's Committee on Banking, Housing, and Urban Affairs, at 10 a.m. ET. On the data front initial claims are due at 8:30 a.m. ET.

The stem, cell and gene therapy RegMed sector closed POSITIVE on Wednesday, NEGATIVE on Tuesday, Monday and Friday, POSITIVE on Thursday, NEGATIVE on last Wednesday.

Past five (5) days (of 43 covered companies):

·         Wednesday closed POSITIVE with 19 decliners, 23 advancers and 1 flat;

·         Tuesday closed NEGATIVE with 27 decliners, 12 advancers and 4 flats;

·         Monday closed NEGATIVE with 36 decliners, 3 advancers and 4 flats

·         Friday closed NEGATIVE with 32 decliners, 9 advancers and 3 flats;

·         Thursday closed POSITIVE with 9 decliners, 32 advancers and 2 flats;

·         Last, Wednesday closed NEGATIVE with 22 decliners, 20 advancers and 1 flat;

In the stem, cell and gene therapy regenerative medicine (SCGT&RM) sector’s investing strategies, I  some times think I employ  the game of rock, papers and scissors as I apply  history matching, frequency analysis, and believe it or not - random guessing based on misapplied factors.  

• My strongest strategy, history matching, searches for a sequence in the past that matches the last few moves in order to predict the next one.

Frequency analysis identifies the most frequently played moves – such as the end-of-day closings numbers. Also, understanding, that unsystematic evidence based guesses are a fallback method that I use to prevent a devastating loss in the event that the other strategies fail.

• Advance/decline lines <A/DL> also reflect my analysis in determining some of those mentioned frequencies!

Reiterating, “our” universe has just too many pockets of weakness but, the pressure on some of the recently beaten-down sector names could be easing!

• If you are picking a stock hoping for an outsized gain during a sector rebound, you are really making a short-term investment. It’s best to consider carefully …

You’ve made it to the office, turned on the monitor having just gotten your coffee and it hits you - what are today’s trades?  Riding the carousel - Thursday’s indications:

• Mesoblast (MESO) closed DOWN -$0.49 to $4.41. Oversold, after its debut with NASDAQ listing as MESO has a history of mediocre share price performance and capital raisings, a pattern which is the norm for “our” universe.  If all three of MESO’s therapies were approved in their P3 trials, Mesoblast could earn an estimated $2 billion in revenue in 2025. Credit Suisse describes their potential as “blockbuster” with a fair value of US$24 on the ADRs if it can deliver on its heart and GVHD programs. At the end of Q1/16, MESO had US$77.8 M in cash, plus another US$63.5 M raised in November (subsequent to the end of the reporting period) for a total of around US$140 M. Oversold, BUY;

• Capricor (CAPR) closed UP +$0.13 to $2.63. After eighteen (18) sessions of upside and small to moderate volume <1/14/16’s $2.01>, I still believe CAPR is totally overbought and will bottom further to the past $2.00 range – Maintaining SELL;

• Histogenics (HSGX) closed UP +$0.32 to $2.64. As always anytime a “run” upward develops, short-term speculators will “nibble’ the edges of appreciation however, HSGX has had the propensity to bounce-back on bad days and decline on good days. 1/4/16’s $3.26 follows 12/1/15’s $3.23 after 11/30/15’s $3.29 and 10/30/15’s $4.11–historical precedence  reflects an oversold condition (to me) – it probably will be depreciated in the next days but, will pop back in the ensuing sessions – HOLD;

Opinions expressed are those of the author and are subject to change, and are not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.

Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.