April 14, 2020 5:38pm

While the health situation remains very bad in absolute term

Pre-open news indications: 8 HITs – sold into strength <ALNY (+$1.71), CRSP (+$2.38), PSTI (+$0.50), FATE (+$2.02)> – increased “powder”; SELL signals - <RENE.L (-$13.00), ATHX (-$0.36), BUY - MESO (+$0.77), STML (+$0.15)>  and 0 MISS

What I provide is an “intelligence newspaper” to ensure that shareholders are kept apprised based on a 24-hour surveillance of “our” universe, the RegMed/cell and gene therapy sector and its surrounding markets. Check the BOTTOM LINE … <read more>

The Dow closed UP +558.99 points (+2.39%), the S&P closed UP +84.43 points (+3.06%) while the NASDAQ closed UP +323.32 (+3.95%)

 

Henry’omics:

From a Monday slump (other than the NASDAQ) to a dramatic pump on Tuesday as optimism slips into the equation.

  • Tuesday’s rally resumes a sharp rebound from the market lows set on March 23. Since then, the S&P 500 is up 27.5%. Investors have been cheering the apparent progress in the fight against the coronavirus along with unprecedented stimulus from the Federal Reserve.

As a quantamental “plotter and poster” which equates to being a quantitative analyst straddling fundamental stock picking to produce better results for investors; the term “quantamental,” blends my combinatorial blending of two styles setting forth an ever-evolving retail, trading and multiple investor hypotheses.

I have also learned that whenever a sector experiences an unexpected shock, separate qualitative and quantitative factors stop working.

  • Because volatility sketches a contradictory picture of the short-term.

The rebound by the U.S. stock market off its March 23 coronavirus low is impressive, but it might be predicated on the wrong question, according to one analyst. “Most of the analysts are asking — ‘When will the economies return back to work?’ — which we believe is the wrong question,” said Boris Schlossberg, managing director of BK Asset Management, in a Tuesday note. “The much more relevant question is — ‘When will aggregate demand recover to pre-virus levels?’ That is a much more difficult dilemma to assess given the massive damage done to consumer balance sheets.” <MarketWatch>

Wading through many words of wisdom is Carl Weinberg, chief economist at High Frequency Economics, who predicted the shape of the economic recovery requires three pieces of information that remain elusive for now:

  • “How far down is the bottom of this economic contraction?
  • How long will it be before we get there?
  • How much of the world’s productive capacity will be destroyed by the contraction?”

Weinberg said he fears that those forecasting a “V-shaped” recovery that will quickly return the economy to pre-virus levels are “hopelessly lost.”

 

I believe that today’s rally will give way to renewed selling pressure as the damage to the economy from lockdowns become apparent and uncertainty about the economic recovery remains.

 

The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:

  • Tuesday, the IBB closed up +3.63% and XBI also closed up +4%
  • Monday, the IBB closed up +0.46% and XBI also closed down -0.16%

 

The CBOE Volatility Index (VVIX: INDEX) tracked:

  • Tuesday was down -3.41 points or -8.28% at 37.76,
  • Monday was down -0.50 points or -1.20% at 41.17,
  • Two weeks ago, in March, the VIX eclipsed its financial crisis high, closing at 82.69.

 

RegMed/Cell and gene therapy 35 covered equities’ Advance/Decline (A/D) lines: progressions and regressions …

  • Tuesday opened positive at 31/4 and 1 flat, stayed positive at the mid-day at 28/6 and 1 flat closing positive at 31/4 of the 35 covered companies;
  • Monday opened negative at 16/17 and 2 flats, stayed negative at the mid-day at 11/24 and closed negative at 16/19 of the 35 covered companies;

 

Tuesday’s (top 10) incliners:

  • Ultragenyx Pharmaceuticals (RARE +$4.36 after Monday’s +$0.73, Thursday’s -$0.52, Wednesday’s +$2.31 and last Tuesday’s -$0.75);
  • Global Blood Therapeutics (GBT +$4.07);
  • bluebird bio (BLUE +$2.76 after Monday’s -$0.59 following Thursday’s +$3.46);
  • CRISPR Therapeutics (CRSP +$2.38);
  • uniQure NV (QURE +$2.11 after Monday’s +$1.23 following Thursday’s -$2.50, Wednesday’s +$3.54 and last Tuesday’s +$2.67);
  • Fate Therapeutics (FATE +$2.02);
  • Alnylam Pharmaceuticals (ALNY +$1.71 after Monday’s +$2.63 following Thursday’s+$4.99, Wednesday’s +$1.87 and last Tuesday’s -$2.62;
  • Ionis Pharmaceuticals (IONS +$1.52 after Monday’s -$1.75);
  • Cellectis SA (CLLS +$1.36 after Monday’s +$0.78);
  • Homology Medicine (FIXX +$1.30 after Monday’s -$0.64);

Tuesday’s (only 4) decliners:

  • ReNeuron (RENE.L -$13.00 following Thursday’s +$27.00 after Wednesday’s +$16.00, Tuesday’s +$21.00 and last Monday’s +$4.00);
  • Sage Therapeutics (SAGE -$0.65 after Monday’s -$0.58 following Thursday’s -$0.98);
  • Biostage (BSTG -$0.45 after Monday’s -$0.25);
  • Athersys (ATHX -$0.36 after Monday’s +$0.55 following Thursday’s -$0.06);

 

Today’s stand-outs: a few targeted patterns …

  • 5-session repeater – Fate Therapeutics (FATE), Alnylam Pharmaceuticals (ALNY), CRSP Therapeutics (CRSP);
  • 4-session repeater - Editas Medicine (EDIT);
  • 3-session repeater:  Ultragenyx (RARE);
  • 2-session repeater – uniQure (QURE);
  • Back on the upside board: Global Blood Therapeutics (GBT);
  • Popping back to the upside – Pluristem (PSTI);
  • Floating down after a 2-session downside and news of a restructuring – Sage Therapeutics (SAGE)
  • 1 down session after 6-sessions of upside – ReNeuron (RENE.L);
  • Daily flipflop/take down session: Athersys (ATHX);
  • Hop-scotching – Biostage (BSTG closed down in 6 sessions and up 3 times in the last nine (9) sessions;

 

 

Volumes versus 3-month averages: moving the needle ...

  • Tuesday’s volume was LACKLUSTER as 10 out of the 31-upside had higher than the 3-month average volume and only 3 out of the 4-downside had higher than the 3-month average volume.
  • Monday’s volume was even LOWER as 5 out of the 16-upside had higher than the 3-month average volume and only 3 out of the 19-downside had higher than the 3-month average volume.

 

Percentage (%) movement/range statistics: the patterns are up although down for the week …

  • Tuesday’s % of the 31-upside were +1.44% (ALNY) to +12.98% (CLLS) while the 4-downside ranged from -2.28% (SAGE) to -12% (BSTG) were a lot higher than usual. 
  • Monday’s % of the 16-upside were +0.33% (FATE) to +19% (BLCM) while the 19-downside ranged from -0.35% (GBT) to -9.70% (VYGR) were a lot higher than usual. 

 

Sentiment and its indicators:

Investor sentiment is less dissipated with optimism of a peaking infection but, the duration of COVID-19 remains unknown and the jobless climb.

  • President Trump said in a press conference Monday that growth in new coronavirus infections stabilized, providing “clear evidence” that mitigation is working in the country;
  • While New York Gov. Andrew Cuomo struck an optimistic tone about the outbreak in his state, the epicenter of the pandemic in the United States. He said Monday it appears that “the worst is over ... if we continue to be smart going forward.”

Defining pandemic disruption: The number of confirmed U.S. coronavirus cases:

  • Tuesday to 584,000 …
  • Monday to 560,800,

Tuesday’s death rate escalated to 24,485 after Monday’s 22,861 <John Hopkins University>

 

Upside volume stats: 

  • Tuesday: 10 out of the 31-upside had higher than the 3-month average volume;
  • Monday: 5 out of the 16-upside had higher than the 3-month average volume;

Downside volume stats:

  • Tuesday: 3 out of the 4-downside had higher than the 3-month average volume;
  • Monday: 3 out of the 19-downside had higher than the 3-month average volume;

 

April

Tuesday closed positive with 4 decliners, 31 advancer and 0 flats

Monday closed negative with 19 decliners, 16 advancer and 0 flats

Friday was a market holiday

Thursday closed positive with 7 decliners, 28 advancer and 0 flat

Wednesday closed positive with 4 decliners, 30 advancer and 1 flat

Tuesday closed negative with 18 decliners, 17 advancer and 0 flats

Monday closed positive with 2 decliners, 33 advancer and 0 flats

Friday closed negative with 23 decliners, 12 advancer and 0 flats

Thursday closed positive with 10 decliners, 23 advancer and 2 flats

Wednesday (4/1) closed negative with 31 decliners, 4 advancer and 0 flat

 

The BOTTOM LINE:  I’m NOT BUYING into today’s rally – I recommended SELLING into strength; the RegMed/cell and gene therapy sector will stay range bound for the next months, even quarters with year-end finding a balance … if and when clarity of signals emerge.

  • Play the “tourist trade” i.e. trade the dramatic highs, wade into the lows – skimming both as time and optimism plays out;
  • I’m expecting another downdraft - pulling on my technical analysis gloves, I anticipate “handling” the ups and downs based on the cyclical indicators as too many contradictory signals exist in this hazy atmosphere;
  • One indicator to watch CLOSELY is capital market access – is “ain’t there!
  • Another HOT indicator is when insiders specifically, management teams start putting their own cash into the companies they’re employed by (notice the wording sarcasm);
  • The remainder of the quarter’s trading sessions will be critical for the RegMed/cell and gene therapy sector which establishes that directional reactions are short-lived as its 1-2 day upside followed by downside moves facilitate more fundamental corrections. 

 

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.