June 21, 2019 7:22pm

A quadruple witching as investors unwound futures and options contracts prior to expiration!

Month and quarter’s end is getting … closer!

Pre-open indications: 5 HIT and 1 MISS

The remainder of the month’s trading sessions will be critical for the RegMed sector which will establish whether expectation of the month and quarter’s (Q2) initiate a slow downdraft.  

 

Don’t get comfortable, today’s market impacts Monday; If you were a subscriber … you would understand why!

 

Markets and indexes:

  • The Dow closed down -34.04 points or -0.13% to 26,719.13
  • The S&P closed down -3.72 points or -0.13% at 2,950.45
  • The NASDAQ was down -19.63 points or -0.24% to 8,031.71

 

Henry’omics:

Markets slip as my covered sector companies flipped to the upside – reason = it was oversold and a haven for buying-in or cherry picking!

A quadruple witching as investors unwind interests in futures and options contracts prior to expiration!

  • This “event” occurs on the 3rd Friday of the month of every quarter, in March, June, September, and December, and refers to the simultaneous expiration of single-stock options and futures and index options and futures;
  • The four-pronged expiration for options, which grant investors the right but not the obligation to buy an underlying asset at a given price and time, and futures has instilled a modicum of trepidation investors but has mostly been a benign event.

… More than some covering going on?

Monday broke to the upside (after the previous Friday’s decline) yet weakened Tuesday, Wednesday and Thursday to blossomed on Friday

Indexes edged lower as U.S. VP Pence's decision to defer a speech on China policy increased optimism on upcoming trade talks between Washington and Beijing, while tensions between the U.S. and Iran undercut sentiment.

The S&P 500 fell slightly on Friday after reaching a fresh record high earlier in the day.

For the week, the S&P 500 climbed 2.20%; the Dow added 2.41% and the NASDAQ rose 3.02%.

Verastem (+$0.22) finally showed signs of life after its CEO “resigned” and it presented COPIKTRA data showing response rates of 44% to 57%, including complete response rates of 15% to 22% in patients with relapsed or refractory peripheral T-cell lymphoma and bluebird bio (BLUE +$2.77) jumped on being oversold.

While ReNeuron (RENE.L -$1.50), Ultragenyx (RARE -$0.88) and BioLife Solutions (BLFS -$0.59) declined – I also ask why on these three?

Volume to the upside increased, while the downsizers’ volume diminished:

  • 10 out of the 22 upside had higher than the 3 month average volume;
  • 5 out of the 19 downside had higher than the 3 month average volume;

But, the always au contraire – there were a few equities running to be overbought targets!

 

Friday’s advance/decline line scenario of 45 covered companies:  

  • The open was negative with an A/DL of 3/40 with 0 flat and 2 acquired;
  • The mid-day was negative with an A/DL of 16/26 with 1 flat and 2 acquired;
  • The close was positive with an A/DL of 22/19 and 2 flats and 2 acquired;

 

Pre-open post: “in this market; sector investment factors beyond the Middle East tensions … A few to consider, advancing clinical milestones with multiple catalysts, a minimally crowded disease state, value paralleled to comparables; unfortunately low volume as slow and drifting fundamentals are inhibitors. The slippery slope, under the surface what should stand out – management team, board of directors, advisory boards and the real caveat – past spending patterns that match platform momentum? Biggest issue: NO NEWS”

 

Pre-open indications: 5 HIT and 1 MISS

  • ReNeuron (RENE.L) closed down -$1.50 – hit;
  • Vericel (VCEL) closed up +$0.4 – miss;
  • Intellia Therapeutics (NTLA) closed flat with 396.5 K shares traded – hit;
  • Editas Medicine (EDIT closed up +$0.42 – hit;
  • CRISPR Therapeutics (CRSP) closed up +$1.06 – hit;
  • Verastem (VSTM) closed up +$0.22 – hit;

 

Worst-performers (bottom 5) were:

  • Friday: RENE.L (-$1.50), RARE (-$0.88), BLFS (-$0.59), IONS (-$0.59) and XON 9-$0.44);
  • Thursday: RENE.L (-$12.50), CRSP (-$2.60), BLUE (-$2.580, VYGR (-$0.90) and SAGE (-$0.73);
  • Wednesday: RENE.L (-$17.50), CRSP (-$1.25), RGNX (-$1.08), ALNY (-$1.05) and FIXX (-$0.97);
  • Tuesday: RENE.L (-$5.00), BLUE (-$4.38), QURE (-$3.13), AXGN (-$1.46) and MDXG (-$0.08);
  • Monday: RENE.L (-$7.50), CLBS (-$0.29), KOOL (-$0.16), MESO (-$0.137) and HSGX (-$0.059);        `              `

Posting gains (top 5) were:

  • Friday: GBT (+$3.62), BLUE (+$2.77), ONCE (+$2.06), BMRN (+$1.55) and SAGE (+$1.55);
  • Thursday: QURE (+$3.42), ALNY (+$1.470, BMRN (+$1.34), GBT (+$0.83) and RGNX (+$0.72);
  • Wednesday: GBT (+$2.25), BLUE (+$1.36), ONCE (+$1.27), RARE (+$0.97) and VCEL (+$0.63);
  • Tuesday: SAGE (+$2.61), ONCE (+$2.26), GBT (+$2.06), RGNX (+$1.60) and ALNY (+$1.52);
  • Monday: QURE (+$8.59), SAGE (+$5.52), BLUE (+$5.04), CRSP (+$3.80) and RARE (+$3.74);

 

Upside volume stats:  to compare

  • Friday: 10 out of the 22 upside had higher than the 3 month average volume;
  • Thursday: 2 out of the 14 upside had higher than the 3 month average volume;
  • Wednesday: 4 out of the 15 upside had higher than the 3 month average volume;
  • Tuesday: 9 out of the 33 upside had higher than the 3 month average volume;
  • Monday: 10 out of the 33 upside had higher than the 3 month average volume;

Downside volume stats:

  • Friday: 5 out of the 19 downside had higher than the 3 month average volume;
  • Thursday: 9 out of the 29 downside had higher than the 3 month average volume;
  • Wednesday: 4 out of the 26 downside had higher than the 3 month average volume;
  • Tuesday: 3 out of the 9 downside had higher than the 3 month average volume;
  • Monday: 3 out of the 10 downside had higher than the 3 month average volume;

 

The week’s percentage (%) indicators: 

  • Friday’s range of the 22 upside was +0.53% (AGTC) to +13.84% (VSTM) while the 19 downside ranged from -0.40% (SLDB) to -5.82% (KOOL -$0.17);
  • Thursday’s range of the 14 upside was +0.23% (RARE) to +4.42% (QURE) while the 29 downside ranged from -0.20% (ONCE) to -16.32% (VSTM);
  • Wednesday’s range of the 15 upside was +0.13% (BOLD) to +4.40% (VSTM) while the 26 downside ranged from -0.04% (VYGR) to -7.37% (RENE.L);
  • Tuesday’s range of the 33 upside was +0.05% (PSTI) to +13.16% (XON) while the 9 downside ranged from -1.41% (MESO) to -12.25% (HSGX -$0.029);
  • Monday’s range of the 33 upside was +0.04% (PSTI) to +25% (VSTM +$0.35) while the 10 downside ranged from -0.11% (BLFS) to -20% (HSGX -0.059);

2 flats – BSTG and NTLA with 2 acquired (AST & OSIR) and the Spark Therapeutics’ (ONCE) acquisition by Roche still being delayed

 

The iShares NASDAQ Biotechnology (IBB) indicator:

  • Friday closed up +0.76%
  • Thursday closed up +0.42%
  • Wednesday closed up +0.57%
  • Tuesday closed up +1.38%
  • Monday closed up +2.96%
  • Last Friday closed down -0.93%

 

June’s sessions:

Friday closed POSITIVE with 19 decliners, 22 advancers, 2 flats and 2 acquired (AST & OSIR);

Thursday closed NEGATIVE with 29 decliners, 14 advancers, 0 flat and 2 acquired (AST & OSIR);

Wednesday closed NEGATIVE with 26 decliners, 15 advancers, 2 flat and 2 acquired (AST & OSIR);

Tuesday closed NEGATIVE with 33 decliners, 9 advancers, 1 flats and 2 acquired

Monday closed POSITIVE with 10 decliners, 32 advancers, 1 flat and 2 acquired (AST & OSIR);

Friday closed NEGATIVE with 30 decliners, 11 advancers, 2 flat and 2 acquired (AST & OSIR);

Thursday closed POSITIVE with 10 decliners, 32 advancers, 1 flat and 2 acquired (AST & OSIR);

Wednesday closed POSITIVE with 17 decliners, 26 advancers, 0 flats and 2 acquired (AST & OSIR);

Tuesday closed NEGATIVE with 32 decliners, 7 advancers, 4 flats and 2 acquired (AST & OSIR);

Monday closed NEUTRAL with 21 decliners, 21 advancers, 1 flat and 2 acquired (AST & OSIR);

Friday closed POSITIVE with 10 decliners, 31 advancers, 2 flats and 2 acquired (AST & OSIR);

Thursday closed NEGATIVE with 37 decliners, 5 advancers, 1 flat and 2 acquired (AST & OSIR);

Wednesday closed NEGATIVE with 24 decliners, 17 advancers, 2 flat and 2 acquired (AST & OSIR);

Tuesday closed POSITIVE with 10 decliners, 32 advancers, 1 flat and 2 acquired (AST & OSIR);

Monday closed POSITIVE with 17 decliners, 25 advancers, 1 flat and 2 acquired (AST & OSIR);

 

Q2/19 so far:

  • In May, there were 14 negative, 1 holiday and 8 positive closes;
  • In April, there has been 10 positive and 11 negative closes;

 

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.