January 5, 2018 7:24am
The issue, ETF exposure, algorithms secede the trade versus investors
As traders play equity monopoly, skimming some “vig” while leveraging momentum
Review the “ups”, volume is still low while the downsized experienced higher numbers
Pre-open indications: 6 SELLs and 4 BUYs
Higher open expected
Dow futures are UP +0.33% (+83 points) and NASDAQ futures are UP +0.36% (+24 points)
U.S. stock index futures pointed to a positive open on Friday, ahead of the all-important U.S. employment data.
European markets were higher, supported by a strengthening regional economy and gains in U.S. equities overnight.
Asian markets closed higher, tracking stateside gains after the Dow Jones industrial average hit a major milestone. Markets in the region traded at or around multi-year highs, with Japan's benchmark index touching a 26-year high and the Hang Seng Index earlier hitting a fresh decade-high.
Issues that will affect the trading day: non-farm payroll data and oil pricing (declined) as production rises from the U.S. weighs on sentiment.
Data docket: December employment situation report from the Bureau of Labor Statistics, due out at 8:30 a.m. ET. Investors will also be on the lookout for international trade data, due out at 8:30 a.m. ET, in addition to the non-manufacturing ISM report on business and factory orders, both set to be released at 10 a.m. ET.
Issues on the political front: investors have shrugged off concerns surrounding geopolitical tensions between North Korea and the West
Henry’omics:
From Thursday night’s closing bell post, “… opened down, stayed depressed at the mid-day and closed barely positive. As I stated, “we … saw two (2) positives closes with highs but decliners are edging up from 7 to 15 and a major snow storm could tilt the markets!” The IBB was down -0.82% after being up +1.04% over two (2) sessions with the NASDAQ hits new record.”
I am usually an optimist yet I feel a foreboding twitch re the sector’s utter speculation beyond the usual oversold or overbought conditions.
Slow and steady and usually early do I trade!
It seems that a holdover from 2017 is to SELL into the news which undermines and causes equity disruptions.
Investors have an undersupply of reliable information of the sector which contributes to momentum and empowers traders to “bully” a stock and day traders od charlatans as many are to allow deceptive thinking to surface and thrive!
Which basically defines momentum …
The cell therapy sector’s record over 5 sessions (of 40 covered companies): The RegMed and cell therapy sector closed POSITIVE on Thursday, Wednesday and Tuesday, a New Year holiday on Monday, NEGATIVE on Friday and last Thursday:
· Thursday closed barely POSITIVE with 19 decliners, 21 advancers and 0 flats;
· Wednesday closed POSITIVE with 15 decliners, 23 advancers and 2 flats;
· Tuesday closed POSITIVE with 7 decliners, 31 advancers and 2 flats;
· Monday was NEW Year’s day;
· Last Friday closed NEGATIVE with 25 decliners, 14 advancers and 1 flat;
Today’s indications:
The iShares Nasdaq Biotechnology (IBB) is indicating a NEGATIVE -0.05% in Friday’s pre-market;
The SPDR S&P Biotech ETF (XBI) is NOT indicating in Friday’s pre-market;
The Health Care Select Sector SPDR ETF (XLV) is NOT indicating in Friday’s pre-open;
The iShares Russell 2000 (IWM) is indicating a POSITIVE +0.3% in Friday’s pre-open
Companies in my headlights:
Adverum (ADVM) closed up again +$0.10 to $4.40 with 1.49 M shares traded <3 month average = 433 K shares> after Wednesday’s +$0.65 or $17.81% to $4.30 with 1.53 M shares traded and Tuesday’s +$0.15 to $3.65 with 1.79 M shares traded. Their is a $0.75 or 17.04% premium over three (3) sessions which meets my 15% threshold, December started at $3.05, November at $3.15 and October at $3.90 while September began at $2.80 - Maintaining SELL;
Applied Genetic Technologies (AGTC) closed up +$0.20 to $4.10 with 191.9 K shares traded <3 month average = 111.5 K shares>. The aftermarket indication is a negative -$0.07 or -1.72%. The three (3) sessions of the 2018 have been good as the previous Friday (12/29) closed at $3.67 having been down from Thursday’s $3.67. There is $0.50 in the “till” or an upside of +12.2% which in its history is usually NOT sustainable - SELL;
Asterias Biotherapeutics (NYSEMKT: AST) closed up +$0.30 to $2.45 with 1.068 M shares traded <3 month average = 179.4 K shares> after a shareholder letter outlining 2018 milestones – my issue targets are basically mid-year and pricing is usually unsustainable and their cash position reflects a reduced burn rate – key words to be questioned. Wednesday’s pricing was $2.16, Tuesday was $2.15 and the previous Friday (12/29) was $2.25 after Thursday’s $2.30 – SELL;
AxoGen (AXGN) closed up +$0.50 to $28.65 after Wednesday’s $28.15 and Tuesday’s $27.95 and the previous Friday’s -12/29’s $28.30. The aftermarket indication is a positive +$0.35 or +1.22% - BUY;
BioLife Solutions (BLFS) closed up +$0.04 to $5.98 with 103.3 K shares traded <3 month average = 141.8 K shares>. Preliminary revenue for Q4/17 was $3.1 million, a 39% increase over the prior-year period. For the full year 2017, preliminary revenue was $11 million, a 34% increase from 2016. The growth was driven by increased sales to customers in the regenerative medicine segment and our worldwide distributors. They’re still selling juice but, it looks like a profitable extract. The aftermarket indication is a positive +$0.35 or +5.98% - Maintaining BUY;
BioTime (NYSEMKT: BTX) closed up +$0.17 to $2.55 after Wednesday’s $2.38, Tuesday’s $2.29 and the previous Friday’s (12/29) $2.15 which was down from Thursday’s $2.25. there is a $0.40 or 15.6% premium in the share over four (4) sessions – SELL;
Cellectis SA (CLLS) closed up +$0.20 to $30.10 after Wednesday’s -$0.19 to $29.90 after Tuesday’s +$0.94 or +3.22% to $30.09. The aftermarket indication is a negative -$0.06 or -0.21% - Maintaining SELL;
Fate Therapeutics (FATE) closed up +$0.49 to $6.99 with 682 K shares traded <3 month average = 402.9 K shares>. The aftermarket indication is a positive +$0.21 or +3%. Momentum is an indicator although the stock has appreciated from $6.09 in five (5) sessions – that’s $0.90 or a premium of +12.8%. I’d let it ride - BUY
Regenxbio (RGNX) closed down -$0.60 to $35.20 with 251.4 K shares traded <3 month average = 324.1 K shares>. After a 2017 shareholder update, the aftermarket indication is a negative -$6.25 or -17.76% even though RGNX anticipates substantial clinical data reporting from programs using its NAV Technology Platform, including topline data from our trials of RGX-314 for the treatment of wet age-related macular degeneration, RGX-501 for the treatment of homozygous familial hypercholesterolemia, and trials from our licensees Audentes, Shire and Ultragenyx. In addition, RGNX expects several new INDs for NAV Technology Licensee programs to be filed in 2018, as well as progress updates from AveXis on the continued enrollment of their pivotal trial for SMA Type 1, which uses the NAV AAV9 vector - SELL;
Verastem (VSTM) closed down -$0.09 to $3.05 with 833.2 K shares traded <3 month average = 847.4 K shares> after Wednesday’s $3.14, Tuesday’s $3.21 and the previous Friday’s (12/29) $3.07 after Thursday’s $3.20. VSTM amended its Loan and Security Agreement with Hercules Capital, Inc., increasing its existing borrowing limit under the loan facility from $25 million to up to $50 million in financing. Verastem had received the first $15 million of financing under the original Loan and Security Agreement. Additional tranches of up to $35 million in aggregate will be available to Verastem to drawdown subject to certain conditions – it’s better than an offering, although it costs stock and warrants – BUY;
Opinions expressed are those of the author and are subject to change, and 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. All investments are subject to risks. Investors should consider investment objectives.
Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.
