February 28, 2018 8:04am

The weakness is usually followed by the oversold being recognized who then will progress to being the overbought

Sector rotation is hot one-day and the loser the next and we are now in the midst of quarterly financial results AKA earnings

 

As I had stated, “We’ve seeing weakness slip back into the scene – it has been behind the curtain the whole time as momentum sent strength to the downside. It was coming as algorithms were percolating and infecting the upside!”

 

Quarterly financial results: AXGN

Pre-open indications: 3 BUYs and 5 SELLs

 

If you had been subscribing, today’s events would not have been a surprise

 

Slightly higher open expected and ... 

The IBB is NOT indication

 

Dow futures are UP +0.09% (+23 points) and NASDAQ futures are UP +0.25% (+17.25 points)

 

U.S. stock index futures were slightly higher ahead of Wednesday's open, as investors tried to shrug off concerns following a testimony by the chair of the Federal Reserve.

European stocks move lower on Fed’s Chair Powell’s comments

Asian shares fall following Fed Chair Powell's testimony

 

Issues to be faced at the open: volatility

Data docket: a second estimate of the U.S. gross domestic product (GDP) data is slated to come out at 8:30 a.m. ET, with investors set to see if there are any clues as to how the U.S. economy is performing. At 9:45 a.m. ET, Chicago purchasing managers' index (PMI) data is due, followed by pending home sales data at 10 a.m. ET. Mortgage applications will also be released at the usual weekly time of 7 a.m. ET.

 

Been where, done what …

RegMed, stem, gene and cell therapy sector’s record over 5 sessions (of 40 covered companies):

  • Tuesday closed NEGATIVE with 24 decliners, 15 advancers and 1 flat;
  • Monday closed POSITIVE with 17 decliners, 20 advancers and 3 flats;
  • Friday closed POSITIVE with 17 decliners, 21 advancers and 2 flat;
  • Thursday closed POSITIVE with 10 decliners, 28 advancers and 2 flats;
  • Last Wednesday closed POSITIVE with 13 decliners, 24 advancers and 3 flats;

 

 

Henry’omics:

From last night’s newsletter, “…sector trips to the downside after opening positive, traveling in the wilderness of uncertainty to close with a downside advance/decline line (A/DL) of 15/24. While the sector re-tests lows for the umpteenth time; it’s not a question of sentiment, it still slurps of momentum

Shugging-off the up, down and side step moves of the sector are mind boggling ... so again it is time to "play" these stocks.

Which means sell into strength and come back as they're oversold and can be picked-up at a lower pricing.

There is a cost of transaction however, it is a lot low than abject losses!

 

Today’s indications:

  • The iShares Nasdaq Biotechnology (IBB) is indicating a NEGATIVE -0.28% downside in Wednesday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) is NOT indicating in Wednesday’s pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) is NOT indicating in Wednesday’s pre-open;
  • The iShares Russell 2000 (IWM) is indicating a POSITIVE +0.07% upside in Wednesday’s pre-open

 

Companies in my headlights:

AxoGen (AXGN) closed up +$1.70 to $31.30 after Tuesday’s +$0.55 to $29.50 after Monday’s +$0.30 to $28.95 with low 174.7 K shares traded <3 month average = 291.9 K shares>after Thursday’s +$0.15 to $28.65 after Wednesday’s +$0.75 to $28.50 with 227.2 K shares traded after Tuesday’s +$0.35 to $27.75 with 267.2 K shares traded. A little too “toppy” for me in eleven (11) sessions the shares have jumped from $24.40, that’s a $6.90 or a +22.1% premium. Also quarterly results day - Maintaining SELL;

bluebird bio (BLUE) closed up +$2.00 to $203.15 with 409.1 K shares traded <3 month average = 979.1 K shares>after Monday’s -$4.90 to $201.50 after Friday’s  +$4.85 to $206.50 with low 424.8 K shares traded after Thursday’s down -$6.20 to $201.20 with 1 M shares traded after Wednesday’s +$1.95 to $207.40 in a day’s range that went as high as $213.20 before it sold-off with 303.4 K shares traded after Tuesday’s -$7.90 to $205.45 with low volume of 593.1 K shares traded. Quarterly results missed expectations, BLUE’s shares have risen 16% since the beginning of the year.  BLUE released Q4/17 earnings last Wednesday without warning or holding a conference call. Nevertheless, is there an arrogance factor as BLUE had to issue and update on Thursday evening. CEO Leschly has laid out the BLUE's plans for filing three (3) marketing applications over the next two years: with regulatory authorities in the next two years: LentiGlobin in TDT in 2018, Lenti-D in [cerebral adrenoleukodystrophy] in 2019 and, with its partners at Celgene, bb2121 in multiple myeloma, also in 2019.  What about 2018 (?), they’ll still be spending – there is a negative aftermarket -$0.05 or -0.02% - Maintaining SELL;

Fate Therapeutics (FATE) closed down -$0.56 to $11.50 after Monday’s +$0.30 to $12.06 after Friday’s +$1.18 to $11.76 with 1.05 M shares traded <3 month average =671.2 K shares traded>.  Like the company but traders are always on the prowl for strength and upside associated with volume; in eleven (11) sessions, the stock has risen from $7.80 – a $7.54 or -65.5% premium – Maintaining SELL;

Caladrius Bioscience (CLBS) closed up again +$0.22 to $4.78 with 135.8 K shares traded <3 month average = 51.2 K shares> after Monday’s+$0.28 to $4.56 after Friday’s flat at $4.26 with 2.57 K shares traded after Thursday’s +$0.24 to $4.28 with 45.5 K shares traded. Seven (7) sessions ago, CLBS was trading at $3.78, maybe time to profit and maybe come back after quarterly results, that’s a $0.76 or 16.6% premium in the shares price – Maintaining SELL;

Mesoblast (MESO) closed down -$0.42 to $6.88 with 120.6 K shares traded <3 month average = 54 K shares>after Monday’s +$1.11 to $7.30 with 157.2 K shares traded. Quarterly results are today and spending and cash position will be “illuminated”; the aftermarket indication is a positive +$0.27 or +3.92% - SELL to BUY;

MiMedx (MDXG) closed down -$0.08 to $7.27 after Monday’s  -$0.48 to $7.35 with 23.96 M shares traded <3 month average = 2.58 M shares> after Friday’s -$1.05 to $7.83 with 14 M shares traded after Thursday’s -$0.17 to $8.88 with 5.57 M share traded with an aftermarket indication of +$0.12 or +1.63%. MDXG has been shaken by short seller drama and a now current issue of accounting – what’s new. There is always a bounce back as 2/1 opened at $17.13, thus there is a wide upside margin. A contrarian – Maintaining BUY;

Sangamo therapeutics (SGMO) closed down $1.50 to $23.45 with3.24 M shares traded <3 month average = 1.8 M shares>. The Medicines and Healthcare Products Regulatory Agency (MHRA) of the United Kingdom has granted the Clinical Trial Authorization (CTA) for enrollment of subjects into the ongoing Phase 1/2 clinical trial evaluating SB-FIX, a zinc finger nuclease (ZFN)-mediated in vivo genome editing treatment for hemophilia B. The CTA allows for initiation of Europe's first in vivo genome editing study. The pre-market indication is a positive +$1.05 or +4.48% upside indication - BUY

Vericel (VCEL) closed up again +$0.15 to $8.25 after Monday’s +$0.80 to $8.10 with 1.13 M shares traded <3 month average = 661.2 K shares>. Still bothered by the $25 m ATM utilization as pricing strength will be sold into, there is a +$1.30 or +15.75% premium in four (4) sessions – SELL;

 

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.