March 24, 2020 8:34am
We all know stocks have fallen at an unprecedented rate, what we don’t know is when the pandemic will totally break, a stimulus will lighten some financial burden and pessimism
Pre-open indications: 5 BUYs and 1 Maintaining SELL and 1 SELL into Strength
March continues as a rollercoaster theme month – my version of the morning’s forecast is written to what I anticipate is about to happened
Dow future are UP +4.13% (+764 points), S&P futures are UP +4.35% (+97 points) and NASDAQ futures are up +4.08% (+284 points)
U.S. stock indexes futures inclined sharply hitting a ‘limit up’ on optimism a coronavirus, Wuhan virus or COVID-19 rescue bill is getting closer;
European markets bounced after the U.S. Fed’s announced open-ended asset purchase program (Monday) and the number of new coronavirus cases in Italy slowed for a second (2nd) day with the pan-European Stoxx 600 jumping +4% in early trade;
Asia Pacific markets also jumped in reaction to the U.S. Fed’s “money printing” moves, with shares in Japan and South Korea leading gains among the region’s major markets.
Data docket: the euro zone releases flash purchasing manager’s index (PMI) data for services and manufacturing for March.
Reinforcing my forecasts on being near a bottom if and when we get a stimulus package done is another view; “It might be time to buy a little, and that means a little,” said David Tepper, a hedge fund manager and the founder of Appaloosa Management cautioned that the market could still fall by another 10% or 15%, and investors should be willing to endure further pain.
When or as a stimulus is approved and implemented; a cause for an incline to slowly begin will become evident.
The overnight moves followed yet another stormy day on Wall Street on Wednesday as investors swung back to pessimism and pushed the major indexes to new multiyear lows as a procedural vote in the Senate on a bill failed for the second time in 24 hours. <CNBC>
We have been struggling and haggling with volatility as the government believes as do many if you throw enough money into the economy – the next alternating sessions will have an impetus to turn!
Review the last 10 sessions:
- Monday closed negative with 20 decliners, 15 advancer and 0 flat
- Friday closed negative with 23 decliners, 11 advancer and 1 flat
- Thursday closed positive with 5 decliners, 30 advancer and 0 flat
- Wednesday closed negative with 25 decliners, 10 advancer and 0 flat
- Tuesday closed positive with 9 decliners, 26 advancer and 0 flat
- Monday closed negative with 34 decliners, 1 advancer and 0 flat
- Friday closed positive with 6 decliners, 29 advancers and 0 flat
- Thursday closed negative with 33 decliners, 2 advancers and 0 flat
- Wednesday closed negative with 32 decliners, 2 advancers and 1 flat
- Tuesday closed positive with 10 decliners, 24 advancers and 1 flat
This ten (10) session trend is an admission that the sector is without any pricing sustainability suppressing a value directional as volatility took its toll.
Hoping to keep the last ten (10) alternating sessions’ closes in check was an announcement from the Fed, which said it would embark on an open-ended asset purchase program. The central bank said the program will run in the “amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.” <CNBC>
I think Aristotle may have been the first to crystallize the fallacies (in writing at least) of many situations we are trying to deal with. Ad Verecundiam (Appeal to Authority) is certainly one fallacy, Ad Metum (Appeal to Fear) is the answer to the argument!
Monday night’s title: “: a distressed market influences the cell and gene therapy sector. Declines are not as deep before any possibility of inclines get started as a patient investor I’d be “nibling” bottoms.”
- the NASDAQ closed DOWN -18.84 points (-0.27%);
- the IBB closed down -0.55% and XBI also closed down -0.80%;
- the range of the 15-upside was +0.43% (BCLI) to +10.64% (FIXX) while the 20-downside ranged from -0.16% (GBT) to -22.71% (PGEN);
- 3 out of the 15-upside had higher than the 3-month average volume;
- 10 out of the 20-downside had higher than the 3-month average volume;
- March registered 10 negative and 6 positive closes
- February registered 9 negative, 9 positive closes, 3 vacation days and 1 holiday.
- January registered 9 negative, 10 positive closes and 2 holidays.
- December registered 11 negative and 10 positive closes
- November registered 8 negative, 12 positive and 1 holiday closes;
- October registered 14 negative, 10 positive and 1 neutral closes;
Companies in my headlights – It’s your decision; I provide an idea and context:
Pre-open indications: pull back for a better prepared position - save the portfolio!
- Athersys (ATHX closed up +$0.17 to 41.95 after being down -$0.07 to $1.78, being up +$0.43 but, ATHX’s spotty pricing and endless financings. ATHX had lows of $1.19, 1.22, $1.17, $1.21 and four (4X) time at $1.22 having opened 3/2 at $1.22 – NOT a believer;
- bluebird bio (BLUE closed down -$1.16 to $47.44 after Friday’s+$2.17, Thursday’s +$4.46 and Wednesday’s -$1.58) having started march at $73.84. Always a target with six (6)in the mid to high $40’s during the month so far - oversold;
- Alnylam Pharmaceuticals (ALNY closed down -$4.79 to $99.06 on moderate volume having started March at $111.42 and did experience a few below $100 sessions – two (2) at $98.30 (3/16 and $93.12 (3/12) – oversold;
- Ionis Pharmaceuticals (IONS closed down -$1.98 to $41.60 after Monday’s -$2.49 having started March at $52.30 with yesterday (Monday) pricing at the lowest ebb at $41.60 – oversold;
- BioLife Solutions (BLFS closed down -$0.38 to $8.74 with 177.5 k shares traded after Monday’s -$2.72 to $9.12, with larger (352.1 K) than 3 months average (192.5 K shares) shares traded, short-term is positive. 3/2 trading price was $14.36 and twice traded down to $8.36 and $8.64 during March. A 52-week low of $7.37 versus a high of $21.18 sends a message, in my mind a target of a potential acquisition (but, they in the past wanted cash) by its market’s positioning;
- Vericel (VCEL closed down -$0.54 to $7.40 having started march at $15.36 and a seven 97) session decline with solid volume after having risen to heights and solid Q4 and FY19 results of net income of $9.5 million, or $0.20 per share, compared to $5.2 million, or $0.11 per share. Q4/18 followed with a net loss of $9.7 million, or $0.22 per share, which includes the $17.5 million upfront license payment to MediWound Ltd. for North American rights to NexoBrid® and $79 million in cash at year’s end. Post the collaboration, the U.S. Biomedical Advanced Research and Development Authority (BARDA) began procuring NexoBrid for emergency stockpile as part of the U.S. Department of Health and Human Services’ mission to build national preparedness for public health medical emergencies; and is planning a mid-2020 submission of the NexoBrid Biologics License Application to the FDA.
SELL into strength:
Regenxbio (RGNX closed up +$0.38 to $27.88 after Friday’s +$1.89 to $27.50, Thursday’s +$4.31 and Wednesday’s -$5.34) and could be a target of profit taking
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.