August 26, 2022 4:47pm
Feeding the algos instead of investors
Pre-open indications: 3 HITs, 2 MISS and 1 Pump/Promote
WHY and HOW is this market affecting the cell and gene therapy sector … “The Bottom Line” underlines the framework of share pricing actions. Who else is tracking a broad grouping of cell and gene therapy equities – can you afford to not read facts supported by real numbers?
No tunnel vision here, this analyst/journalist gets into the weeds of daily share pricing and root causes
The week in review - what happened and to whom, the root metrics
If I have learned one thing as a former research analyst, venture and public fund investor now a journalist; it is that your life and your bank account are largely tied to your knowledge of price movements and questioning pricing targets.
The Dow closed DOWN -1,008.38 points (3.03%); the S&P closed DOWN -141.46 points (-3.37%) while the Nasdaq closed DOWN -497.55 points (-3.94%)
Indexes sold off as the selloff intensifying Friday afternoon following Fed Chair Powell's “pithy” speech at Jackson Hole vowing to fight inflation until the battle has been won by bringing the annual cost of living back down to the central banks’ 2% target.
- Fed Chair Powell said the central bank won’t back off in its fight against rapid inflation … meaning WHAT - 75 basis points?
Indexes mark its worst daily percentage decline since June.
Quote, “Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy,” Powell said.
The major averages were on pace for their second straight down week; the Dow is on track for a -2.9% decline. The S&P 500 lost -2,8% and Nasdaq -3.2%.
The Fed could/would/should keep raising interest rates to tame inflation, dashing investors' hopes that the Fed's aggressive approach to hikes might be modified soon.
One can’t just think of our cell and gene therapy sector while the U.S. economy WILL need tight monetary policy … "for some time" before inflation is under control, Powell said. That means slower growth, a weaker job market and "some pain" for households and businesses. <J. Powell, Fed Chair>
- Traders were still divided between a 75-basis-point and a 50-basis-point hike by the Fed, while economists see the central bank lifting rates by 50 basis points at its meeting next month.
Economic Data Docket: The personal consumption expenditures data showed price increases eased in July. The University of Michigan consumer sentiment index showed a better-than-expected reading.
· Core PCE increased +0.1% in July vs. 0.6% rise in June.
· The final reading for the August consumer sentiment index came in at 58.2. That was up from 51.5 in July and above the 55.3 expected by economists.
· Year-ahead inflation expectations fell to 4.8% from 5.2% in July. That marks the lowest reading in eight months.
RegMed Investor’s (RMi) Pre-Open: “10 a.m. Jerome speaks, will he provide guidance or politically punt? I’d be watching bond volatility and yield curves which could stimulate turbulent markets.” … https://www.regmedinvestors.com/articles/12580
RegMed/Stem/Cell and Gene Therapy’s 35 covered equities’ Advance/Decline (A/D) lines: what happened …
- Friday’s advance/decline line opened negative at 4 up/ 30 down and 1 flat, stayed negative with 5 up/29 and 1 flat at the mid-day, ending with a negative close of 1/34 and 0 flat.
- Thursday’s advance/decline line opened positive at 29 up/ 6 down and 0 flat, stayed positive with 19 up/16 and 0 flat at the mid-day, ending with a positive close of 22/12 and 1 flat.
- Wednesday’s advance/decline line opened positive at 29 up/ 6 down and 0 flat, stayed positive with 21 up/12 and 2 flats at the mid-day, ending with a positive close of 31/3 and 1 flat.
- Tuesday’s advance/decline line opened positive at 19 up/ 15 down and 1 flat, stayed positive with 21 up/12 and 2 flats at the mid-day, ending with a positive close of 26/7 and 2 flats.
- Monday’s advance/decline line opened neutral at 16 up/ 16 down and 3 flats, flipped negative with 14 up/20 and 1 flat at the mid-day, ending with a negative close of 7/27 and 1 flat.
Pre-open Indications: 3 HITs < Beam Therapeutics (BEAM -$5.89), BioLife Solutions (BLFS -$1.21), Voyager Therapeutics (VYGR -$0.31)> 2 MISS < Agenus (AGEN -$0.22), bluebird bio (BLUE -$0.21)> 1 Pump/Promote <Biostage (BSTG +$0.15 with 310 shares traded),
Key Metrics: low volume pervades …
- Friday - Sector volume was LOW with 1 of the 1-upside having higher than the 3-month average volume with LOW volume of 6 of 34-downside having higher than the 3-month average volume;
- Thursday - Sector volume was LOW with 2 of the 22-upside having higher than the 3-month average volume with LOW volume of 2 of 12-downside having higher than the 3-month average volume;
- Wednesday - Sector volume was LOW with 6 of the 31-upside having higher than the 3-month average volume with LOW volume of 1 of 3-downside having higher than the 3-month average volume;
- Tuesday - Sector volume was LOW with 7 of the 27-upside having higher than the 3-month average volume with LOW volume of 1 of 7-downside having higher than the 3-month average volume;
- Monday - Sector volume was HIGHER with 1 of the 7-upside having higher than the 3-month average volume with LOW volume of 1 of 27-downside having higher than the 3-month average volume;
The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:
- Friday, the IBB was down -3.53% and the XBI was down -4.97%
- Thursday, the IBB was up +0.30% and the XBI was down -0.29 %
- Wednesday, the IBB was up +1.36% and the XBI was up +2.11 %
- Tuesday, the IBB was down -0.19% and the XBI was up +2.15 %
- Monday, the IBB was down -1.60% and the XBI was down -1.51%
The CBOE Volatility Index (VVIX: INDEX) tracked:
- Friday was up +3.89 points or +17.86% at 25.76
- Thursday was down -0.91 points or -3.99% at 21.91
- Wednesday was down -1.24 points or -5.14% at 22.87
- Tuesday was up +0.31 points or +1.30% at 24.11
- Monday was up +3.50 points or +16.99% at 4.10
Jumping with share pricing momentum (1 of 1):
- Biostage (BSTG +$0.15 with 310 shares traded after Thursday’s-$0.40 with 7,913 shares traded, Wednesday’s +$2.20, Tuesday’s +$0.45, Monday’s $0.00, last Friday’s $0.00, the previous Thursday’s $0.15, Wednesday’s +$0.15 and Tuesday’s $0.00),
- Sangamo Therapeutics (SGMO)
Closing down (10 of 34):
- Beam Therapeutics (BEAM -$5.89 after Thursday’s +$2.31, Wednesday’s +$5.60, Tuesday’s +$2.83 and Monday’s -$1.88),
- CRISPR Therapeutics (CRSP -$5.07 after Thursday’s +$0.47, Wednesday’s +$3.27, Tuesday’s +$2.35 and Monday’s -$2.25),
- Intellia Therapeutics (NTLA -$4.75 after Thursday’s +$1.12, Wednesday’s +$1.82, Tuesday’s +$6.31 and Monday’s -$2.05),
- Fate Therapeutics (FATE -$3.34 after Thursday’s +$0.25),
- Alnylam Pharmaceuticals (ALNY -$2.98 after Thursday’s -$7.08, Wednesday’s +$4.11, Tuesday’s -$1.02 and Monday’s +$1.94),
- Regenxbio (RGNX -$2.68 after Thursday’s +$0.60, Wednesday’s +$1.54 and Tuesday’s +$0.56),
- Verve Therapeutics (VERV -$2.09 after Thursday’s +$1.19, Wednesday’s +$3.35, Tuesday’s +$4.04 and Monday’s -$0.75),
- Vericel (VCEL -$2.09 after Thursday’s +$0.88),
- Ultragenyx (RARE -$1.96),
- Sage Therapeutics (SAGE -$1.79 after Thursday’s -$2.16),
- Friday closed negative with 1 incliner, 34 decliners and 0 flat
- Thursday closed positive with 22 incliner, 12 decliners and 1 flat
- Wednesday closed positive with 31 incliner, 3 decliners and 1 flat
- Tuesday closed positive with 27 incliner, 7 decliners and 2 flats
- Monday closed negative with 7 incliner, 27 decliners and 1 flat
The BOTTOM LINE: I try to keep it simple … and short!
As I asked on Thursday, “what is share pricing SUSTAINABLE?”
As I have further questioned, “The real question that should be asked is how many companies are at the end of sentiments leash? Start by looking at cell and gene therapy companies trading below cash!”
The cell and gene therapy sector is STILL experiencing the “flight of Icarus” … since “our” universe have oscillated between gains and losses since the first of the year!
It came true, “New peaks will just increase the appetite of electronic trading and algorithms.”
There are really three camps, electronic algorithms, traders versus investors who STILL don’t comprehend if the worst is behind us and those “entities” that continue to focus on tailwinds and not headwinds?
There are ONLY net and per share losses in Q2. SG&A’s are, I believe “OUT-OF-CONTROL”, CEOs are skimming shareholders with HIGH salaries and perks as share pricing gets hammered on alternate sessions.
The real question is how recently have CEOs bought-into their depreciated share pricing such as three: AVRO, SLDB and AGTC and let’s NOT forget BCLI who is all but, OUT of CASH.
As I have “noticed” yet again from to date reporting, “Most reporting sector companies … to date have reported net losses, lagging revenue estimates … although AXGN, FATE, RGNX, FIXX and NTLA beat on revenues generating forward motion while ATM use is up.”
I find it very interesting to evaluate share price over earnings and a shortage of revenue reporting as a proxy for share pricing performance?
I stick to my view of anticipating the risks – as my careers focus has been “warning analysis”.
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.
Regulation Analyst Certification (Reg AC): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.