December 15, 2023 5:21pm

Triple witching is when the expiration of stock options, stock index futures, and stock index options all fall on the same day. It only happens four times a year – on the third Friday of March, June, September, and December – which can create a spike in trading volume and volatility.

As $5 trillion in expiring options collides with index-rebalancing mania

Pre-open Indications: 5 Hits and 0 Miss

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Welcome to my world of defining the “grey’ in our universe!

The sector is … still what it is, until it isn’t and even then, it doesn’t seem to be … that is after taking a deep breath and holding it

 

The Dow closed UP +56.81 points or +0.15%, the S&P closed DOWN -0.36 points or -0.01% while the Nasdaq closed UP +52.36 points or +0.35%

 

Henry’omics:

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 …

On Friday, indexes closed mixed as the Dow was up while the S&P slipped and the Nasdaq hit a fresh high.

Economic Data Docket: Domestic business activity picked up in December amid rising orders and demand for workers, which could further help to allay fears of a sharp slowdown in economic growth in Q4.

 

RegMed/Stem/Cell and Gene Therapy’s 35 covered equities’ Advance/Decline (A/D) lines: what happened – differences …

  • Friday’s advance/decline line was positive at the open with 20 incliners, 11 decliners and 4 flats, flipped negative at the mid-day with 14 declined, 19 incliners and 2 flats, ending with a barely negative close of 17 incliners, 18 decliners and 0 flat
  • Thursday’s advance/decline line was positive at the open with 27 incliners, 10 decliners and 2 flats, stayed positive at the mid-day with 26 declined, 9 incliners and 0 flat, ending with a positive close of 24 incliners, 10 decliners and 1 flat
  • Wednesday’s advance/decline line was positive at the open with 21 incliners, 13 decliners and 1 flat, stayed positive at the mid-day with 18 declined, 15 incliners and 2 flats, ending with a positive close of 32 incliners, 2 decliners and 1 flat
  • Tuesday’s advance/decline line was negative at the open with 5 incliners, 27 decliners and 3 flats, stayed negative at the mid-day with 12 declined, 23 incliners and 0 flat, ending with a negative close of 10 incliners, 25 decliners and 0 flat
  • Monday’s advance/decline line was negative at the open with 4 incliners, 28 decliners and 3 flats, stayed negative at the mid-day with 12 declined, 23 incliners and 0 flat, ending with a negative close of 13 incliners, 21 decliners and 1 flat

 

Pre-open Indications: 5 Hits < Alnylam Pharmaceuticals (ALNY -$1.24), Intellia Therapeutics (NTLA -$1.08), Beam Therapeutics (BEAM -$1.37), CRISPR Therapeutics (CRSP -$0.86), Sage Therapeutics (SAGE +$0.45)> 0 Miss

 

Ebb and flow of MY covered sector cell and gene therapy session daily “endings”:

Q4:  December – 5 negative and 6 positive closes

  • November – 11 positives, 1 holiday and 10 negative closes
  • October – 12 negative and 10 positive closes

 

Key Metrics:

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

  • Friday, the IBB was down -0.73% and the XBI was up +0.28%
  • Thursday, the IBB was up +1.03% and the XBI was up +1.79%
  • Wednesday, the IBB was up +4.18% and the XBI was up +4.83%
  • Tuesday, the IBB was up +1.09% and the XBI was up +1.55%
  • Monday, the IBB was up +0.72% and the XBI was down -0.61%

The CBOE Volatility Index (VVIX: INDEX) tracked:

  • Friday was down -0.18 point or -1.44% at 12.30
  • Thursday was up +0.27 point or +2.21% at 12.46
  • Wednesday was up +0.14 point or +1.16% at 12.21
  • Tuesday was down -0.56 point or -4.43% at 12.07
  • Monday was up +0.28 point or +2.27% at 12.63

 

Friday’s Closing Down (10 of 18):

  • Beam Therapeutics (BEAM -$1.37 after Thursday’s +$1.51, Wednesday’s +$2.24, Tuesday’s -$0.61 and Monday’s +$0.25
  • Alnylam Pharmaceuticals (ALNY -$1.24 after Thursday’s +$5.96, Wednesday’s +$4.64, Tuesday’s +$2.96 and Monday’s +$0.88),
  • Intellia Therapeutics (NTLA -$1.08 after Thursday’s +$1.47 after Wednesday’s +$2.24, Tuesday’s -$0.20 and Monday’s -$0.67),
  • Regenxbio (RGNX -$0.86 after Thursday’s +$0.67),
  • CRISPR Therapeutics (CRSP -$0.86 after Thursday’s +$1.51, Wednesday’s +$3.31, Tuesday’s -$2.16 and Monday’s -$4.26
  • Verve Therapeutics (VERV -$0.46 after Thursday’s +$1.01, Wednesday’s +$1.19, Tuesday’s -$0.29 after Monday’s -$0.38),
  • Prime Medicine (PRME -$0.44),
  • AxoGen (AXGN -$0.36 after Thursday’s -$0.11),
  • Vericel (VCEL -$0.28 after Thursday’s +$1.50 and Wednesday’s +$1.43),
  • Compass Therapeutics (CMPX -$0.16)

Friday’s Closing Up (10 of 17):

  • Blueprint Medicine (BPMC +$4.11 after Thursday’s -$1.35),
  • Sage Therapeutics (SAGE +$0.44 after Thursday’s -$0.14 after Wednesday’s +$1.55 and Tuesday’s -$0.22),
  • BioLife Solutions (BLFS +$0.36 after Thursday’s +$0.70 after Wednesday’s +$1.19, Tuesday’s -$0.17 and Monday’s -$0.39),
  • Solid Biosciences (SLDB +$0.25),
  • Voyager Therapeutics (VYGR +$0.18 after Thursday’s -$0.01),
  • uniQure NV (QURE +$0.17),
  • Cellectis SA (CLLS +$0.14),
  • Editas Medicine (EDIT +$0.09).
  • Harvard Apparatus GN (HRGN +$0.09),
  • Ultragenyx Pharmaceuticals (RARE +$0.06 after Thursday’s +$1.16, Wednesday’s +$1.32, Tuesday’s +$2.81 and Monday’s +$0.16),

 

Q4/23 – December

  • Friday closed negative with 17 incliners, 18 decliners and 0 flat
  • Thursday closed positive with 24 incliners, 10 decliners and 1 flat
  • Wednesday closed positive with 32 incliners, 2 decliners and 1 flat
  • Tuesday closed negative with 10 incliners, 25 decliners and 0 flat
  • Monday (12/11) closed negative with 13 incliners, 21 decliners and 1 flat

 

The BOTTOM LINE: I wrote it was coming – a downdraft that today can be laid at the feet of … triple witching’ Friday but … it was coming!

  • Right again as “uncle algo(rithms) and his electronic dwarfs had come to speculate in … the market and the cell and gene therapy sector that had run too far, too fast!
  • I warned that sector portfolios containing cell and gene therapy sector equities should consider getting defensive” … “Investors NEED to start NOW formulating their portfolio outlook into next year.”

Friday’s backdrop:

  • The expiry of quarterly derivatives contracts tied to stocks, index options and futures, also known as "triple witching", added to market volatility late in the day.
  • Benchmark 10-year notes fell 1/32 in price to yield 3.9315%, from 3.93% late on Thursday.
  • The 30-year bond rose 14/32 in price to yield 4.0313%, from 4.054% late on Thursday.

 

From yesterday, “I think the magnitude of the market’s upside and cell and gene therapy sector’s response is exaggerated”. <Me – It was>

 

It's time to think ahead to December. It's usually an important month for the Nasdaq.

  • Don’t FORGET portfolio December tax selling and a bit of rebalancing … “Investors NEED to start formulating their portfolio outlook into next year.”
  • It might be prudent to harvest and cash in some chips following the past month’s dramatic rally.
  • And then comes January and with worries that the U.S. economy will be slowing down, the potential for continued Middle East violence and, of course, the real prospect of bitterly contested elections across all of the United States. <The Street>

The top three (3) performing in the session:

  • Friday: Blueprint Medicine (BPMC) – 3x, Sage Therapeutics (SAGE) and BioLife Solutions (BLFS)
  • Thursday: Alnylam Pharmaceuticals (ALNY) -4x, Beam Therapeutics (BEAM) and CRSPR Therapeutics (CRSP)
  • Wednesday: Alnylam Pharmaceuticals (ALNY) -3x, CRISPR Therapeutics (CRSP) and Intellia Therapeutics (NTLA)
  • Tuesday: Blueprint Medicine (BPMC) -2x, Alnylam Pharmaceuticals (ALNY) -2x and Ultragenyx Pharmaceuticals (RARE)
  • Monday: Blueprint Medicine (BPMC), Alnylam Pharmaceuticals (ALNY) and Ionis Pharmaceuticals (IONS)

The worst three (3) in the session:

  • Friday: Beam Therapeutics (BEAM), Alnylam Pharmaceuticals (ALNY) and Intellia Therapeutics (NTLA)
  • Thursday: Blueprint Medicine (BPMC), Sage Therapeutics (SAGE) and AxoGen (AXGN)
  • Wednesday: Harvard Apparatus GN (HRGN) and Ionis Pharmaceuticals (IONS)
  • Tuesday: CRISPR Therapeutics (CRSP) -2x, Beam therapeutics (BEAM) and Prime Medicine (PRME)
  • Monday: CRISPR Therapeutics (CRSP), Solid Biosciences (SLDB) and Intellia Therapeutics (NTLA)

Welcome to my world of defining the “grey’ in our universe!

  • Right up front, “I also hate to be so negative or contrarian but, this is a NO spin zone and facts are its product; I can always be WRONG but … I am mostly EARLY!”

 

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.