November 9, 2023 4:58pm
After yet another botched sector actions on Wednesday and Thursday as interest rate volatility is dominating the stock market
Pre-open Indications: 3 Hits < Blueprint Medicine (BPMC -$2.01), Vericel (VCEL -$2.84) Regenxbio (RGNX +$0.40)> 3 Miss < Alnylam Pharmaceuticals (ALNY -$4.88), Beam Therapeutics (BEAM -$0.69), Prime Medicine (PRME -$0.66)>
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I also won’t apologize for being a “Devil’s Advocate” challenging views or consensus by building a better or possible case for an explanation of today’s actions
The Dow closed DOWN -220.33 points or -0.65%, the S&P closed DOWN -35.43 points or -0.81% while the Nasdaq closed DOWN -128.97 points or -0.94%
Q3 earnings’ reporting cycle is here to confirm whether or not any bottoms are even close to happening?
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We need to more than consider the economic environment - rising rates and inflation to comprehend the micro re “our” universe of cell and gene therapy companies …
Indexes declined after Fed Chair Powell indicated “more work may need to be done to bring down inflation,” although the recent slowdown in pace has been an encouraging sign for policymakers.
“The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time; we are not confident that we have achieved such a stance.” <CNBC>
Economic Data Docket: a Labor Department report showed jobless claims edged lower last week to 217,000, indicating layoffs have yet to accelerate despite signs of a cooling labor market.
RegMed/Stem/Cell and Gene Therapy’s 35 covered equities’ Advance/Decline (A/D) lines: what happened – differences …
- Thursday’s advance/decline line pre-open was negative with 8 incliners, 25 decliners and 2 flats; was negative at the mid-day with 2 incliners and 33 decliners and 1 flat at the mid-day, ending with a negative close of 3 incliners, 30 decliners and 2 flats
Ebb and flow:
Q4: November – 4 positive and 3 negative closes
· October – 12 negative and 10 positive closes
The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:
- Thursday, the IBB was down -2.95% and the XBI was down -4.09%
The CBOE Volatility Index (VVIX: INDEX) tracked:
- Thursday was up +0.80 point or +5.61% at 15.26
Closing Down (10 of 30):
- Alnylam Pharmaceuticals (ALNY -$4.88 after Wednesday’s -$0.80 and Tuesday’s +$3.05),
- Intellia Therapeutics (NTLA -$3.49 after Wednesday’s -$1.04, Tuesday’s +$1.83 and Monday’s -$1.10),
- CRISPR Therapeutics (CRSP -$3.46 after Wednesday’s -$5.69, Tuesday’s +$7.00 and Monday’s +$0.59),
- Vericel (VCEL -$2.84 after Wednesday’s -$1.24),
- Blueprint Medicine (BPMC -$2.01 after Wednesday’s -$1.36, Tuesday’s +$1.89 and Monday’s -$1.04),
- Ultragenyx Pharmaceuticals (RARE -$1.32 after Wednesday’s -$1.81),
- Sage Therapeutics (SAGE -$1.26 after Wednesday’s -$1.13 after Tuesday’s -$0.98 and Monday’s -$0.68),
- Verve Therapeutics (VERV -$0.71 after Wednesday’s -$1.95, Tuesday’s +$3.72 and Monday’s -$0.60),
- Beam Therapeutics (BEAM -$0.69 after Wednesday’s -$2.09, Tuesday’s +$1.69 and Monday’s -$1.19),
- Solid Biosciences (SLDB --$0.66)
- Harvard Apparatus GN (HRGN)
- Precigen (PGEN)
Closing Up (3 of 3):
- Regenxbio (RGNX +$0.40),
- Ionis Pharmaceuticals (IONS +$0.22),
- Bellicum Pharmaceuticals (BLCM +$0.0005)
Q4/23 – November
- Thursday closed negative with 3 incliners, 30 decliners and 2 flats
The BOTTOM LINE: Sector confidence fizzles …
- Sector stocks slid on Thursday as bond yields rallied following a disappointing treasury auction for investors
- Differing from some, I believe upcoming inflation and economic prints will likely factor into more equity pain, data continues to signal that the economy is slowing but not quite falling off a cliff.
- Equities moved slightly lower prior to Powell's comments as yields climbed after a weak auction of $24 billion in 30-year Treasuries with demand for the debt at 2.24 times the bonds on sale. The benchmark 10-year Treasury note yield was last up nearly 12 basis points at 4.626% on the day.
Fed Chair Powell is "taking a hawkish viewpoint again. He's reassuring the market that the fight against inflation has not been won a and if economic conditions warrant, they won't hesitate to hike rates again. If you add up all the remarks, Powell is telling the market not to get too complacent and that’s putting some pressure on stocks." <Peter Cardillo, chief market economist at Spartan Capital Securities in New York>
- Treasury yields spiked after the 1 p.m. ET auction. The 10-year Treasury yield (^TNX) spiked to 4.62%, about 10 basis points. Meanwhile, the 30-year Treasury yield (^TYX) spiked to 4.8%, about 15 basis points.
- Short positioning and leveraged trading in hedge funds percentage (%) is the highest since November 2018 … Regulators are particularly concerned about one strategy called the basis trade, which involves using leverage to profit from the price gap between Treasury futures and the underlying cash market. It has garnered particular attention from federal watchdogs over concerns about a lack of visibility into the amount of risk in the market.
- Reiterating, more earnings are coming around the bend as LPS (loss-per-share) cascaded.
- Up and down market and past cell and gene therapy activity is reflective of investors sentiment – we be happy as November starts but, does it continue this and next week?
- Middle East conflict still weighed on the market as investors assessed the chances of it breaking out into a wider war. The rising geopolitical tensions in the Middle East could drive a global recession, leading investors have warned.
I STILL believe the political aspect of the U.S.’s polarization, and disparities of the debt ceilings and rate hike arguments are contributing to the roller coaster ride for share pricing actions.
What’s behind the numbers: this week is kind of a dead zone for economic news, but next week investors are going to have CPI (consumer prices), PPI (producer prices) and retail sales.
- Market expectations have become more questionable …
- The sector and overall stock market tends to consistently rise and fall over the short-term with alternating volatility and involuntary momentum contraction.
- I remain EXTREMELY cautious as upcoming earnings may have a more significant negative impact on share price due to missed consensus as estimates will lessen valuations.
Welcome to my world of defining the “grey’ in our universe!
- I believe … there will be deceleration in sector pricing gains and economic activity for the remaining weeks of 2023.
The top three (3) performing in the session:
- Thursday: Regenxbio (RGNX), Ionis Pharmaceuticals (IONS) and Bellicum Pharmaceuticals (BLCM)
- Wednesday: Cellectis SA (CLLS), Homology Medicine (FIXX) and Fate Therapeutics (FATE)
- Tuesday: CRISPR Therapeutics (CRSP) – 5x, Verve Therapeutics (VERV) and Alnylam Pharmaceuticals (ALNY)
- Monday: CRISPR Therapeutics CRSP) – 4x, Verve Therapeutics (VERV) and Alnylam Pharmaceuticals (ALNY)
The worst three (3) in the session:
- Thursday: Alnylam Pharmaceuticals (ALNY), CRISPR Therapeutics (CRSP) and Intellia Therapeutics (NTLA)
- Wednesday: CRISPR Therapeutics (CRSP), Beam Therapeutics (BEAM) and Verve Therapeutics (VERV)
- Tuesday: Sage Therapeutics (SAGE), Cellectis SA (CLLS) and MiMedx (MDXG)
- Monday: Beam Therapeutics (BEAM), Intellia Therapeutics (NTLA) and Blueprint Medicine (BPMC)
Right up front, “I also hate to be so negative or contrarian but, this is a NO spin zone and truth is its product; I can always be WRONG but … I am mostly EARLY!”
- Focus continues to be on the quarterly earnings season!
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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.
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