November 27, 2015 4:20pm

Dial up the basis of the volume and price surges; the next you know, it is a falling knife! Seasoned investors can spot the anomalies; remain objective as day traders and pumpers grease the “slews” … near-term beware!

I’d be worried about short-term actions!  Subscription required … http://www.regmedinvestors.com/create-account

 

 

I say today what others won't, so you can do what others can't - access insight into sector sentiment and share pricing!

 

 

The U.S. stock market closed at 1 p.m. Friday after being closed Thursday for the Thanksgiving holiday.  U.S. stocks ended narrowly mixed in light volume trade Friday, under some pressure from declines in Disney and oil prices as investors eyed Black Friday shopping results.

The NASDAQ closed UP +11.38 or +0.22% to 5,127.52 and the DOW closed DOWN -14.90 or -0.08% to 17,798.49.

 

 

Henry’omics:

The stem, cell and gene therapy RegMed sector opened positive, stayed  positive to the mid-day and with an early close ended positive (of 43 covered companies).

  • Advancers stayed strong but, slotted through the session!

My fear gauge is static – The CBOE Volatility Index (VIX) traded Friday above 15 as Wednesday held near 15 … following Tuesday’s below 16 after Monday’s below 16 … a “hair” below!

  • Contrary to today’s “move” and many stock commentators - I don't see significant (support) for the … upside in the next couple of weeks!!

I read and listen to CEOs, analysts and pundits arguing about the stem, cell and gene therapy RegMed (SCGT&RM) sector; we have traders, the pumpers, the short sellers, hedge funds, institutional and mutual “coffers” and investors.

  • But, who are those have the greatest effect or that causes the most damage and leave investors out in the cold?

On one side of the argument are the analysts who believe all their banking clients are headed to higher levels; then there are the short sellers who believe share prices will crater while the pumpers and the day traders build to a crescendo to a certain exit or an event that usually causes an exit!

  • While the hedge, institutional, mutual fuds along with those “wonderful” <sarcasm> ETFs live-off the above mentioned – watching the machinations usually seeking a balance of the collusions;
  • The latest method or key to this sector has any … strength being sold into and dramatic share pricing and volume becoming more than suspect;
  • I believe each group has their role in making the sector what it is or could be whether it is considered good, bad or ugly but, what bothers me is the … extremes they “run” to and from and that each create risk – that are destruction decreasing value;

The one main lesson we all should have learned from our “universe” that each are likely to inflict pain on any given day or week!

  • Whether these players cause or prevent events - apprehension is created which can <in some cases> nullify investor and institutional interests!

With the stem, cell and gene therapy RegMed sector being one of the most over-bought at times and oversold sectors within the biotech industry; it brings forth the question of navigating the behavior and nuances of this sector.

 

 

My “pet-peeve”:

  • High-frequency trading accounted for 49% - so far in November's daily trading volume of about 7 billion shares. During the peak levels of high-frequency trading in 2009, about 61% of 9.8 billion of average daily shares traded were executed by high-frequency traders <Tabb Group>

 

 

A day in the life of the stem, cell and gene therapy RegMed (SCGT & RM) sector:

  • The SCGT & RM equities opened positive with an Advance/Decline line (A/DL) of 22/19 and 2 flats;
  • The mid-day stayed positive with an A/DL of 27/13 and 3 flats;
  • The closing bell rang positive to the early end Friday’s session with an A/DL of 23/15 and 5 flats.

 

 

Riding the indexes and ETFs roller-coaster:

  • The iShares Biotechnology Stocks ETF (IBB) closed UP on Friday +2.16 or +0.64% after Thursday’s holiday after Wednesday +3.58 or +1.07% following Tuesday’s decline of -0.65 or -0.19% after Monday’s +2.43 or 0.73%;
  • The NASDAQ Biotechnology index (NBI) closed Friday +22.20 or +0.63% after Thursday’s holiday following Wednesday’s +36.44 or +1.04% post Tuesday’s decline of -4.68 or -0.13% after Monday’s advance of +25.64 or +0.74%;
  • The Russell 2000 (IWM) closed UP on Friday +0.45 or +0.38% post Thursday’s holiday following Wednesday’s advance of +0.92 or 0.78% after Tuesday’s advance of +0.86 or +0.73% after Monday’s +0.58 or +0.50%;
  • The SPDR SD&P Biotech ETF (XBI) closed UP on Friday +0.17 or +0.23% following Thursday’s holiday after Wednesday’s +1.45 or +2.04% after Tuesday’s advance of +0.28 or +0.40% after Monday’s advance of +1.08 or +1.55%;

 

 

Dosing the sector – what a day for the 43 Patients:

  • Open: POSITIVE with 19 decliners, 22 advances and 2 flats;             
  • Mid-day (1 pm): POSITIVE with 13 decliners, 27 advancers and 3 flats;
  • Closing bell: POSITIVE with 15 decliners, 23 advancers and 5 flats

 

 

Out and above:

Harvard Apparatus RT (HART) jumped 44% or +$0.45 from $1.76 to $2.20 with 2.973 M shares traded. 

  • Talk about a “bio-engineered” share pricing – a play on adjectives after Wednesday’s share volume of 576.3 K and decease 0f -$0.04. It scares me, when appreciation is more than reliable <to measure> although volume has been staggering since the financial results and PR release hit <since 11/11>;
  • The problem is … it enhances the … targeting by profit-takers and the apparition of a company in transition that needs to access the capital markets!

 

 

A lesson to learn …

Shares of KaloBios (KBIO) +0.43%  surged another 60% in early trade Friday, after its new CEO <the famous if not infamous>, Martin Shkreli, said in a Twitter exchange that he wouldn’t lend any more stock to those looking to short sell it.

  • 49% of KBIO stock was short, meaning investors had been heavily betting the shares would go down.

To short a stock, an investor borrows it from someone who is long. To cover the short position, the investor must buy the shares back. The bet is that the stock will fall in price, allowing the short seller to buy it back at a lower price, and then pocket the difference.

  • But if the share price instead rises … the short seller is left facing unlimited losses.

KaloBios (KBIO) has been surging since Shkreli bought a 70% stake in the company earlier in November, rescuing it from insolvency. KBIO had announced just a week earlier that it was winding down operations because it was running out of cash while developing two potential cancer drugs.

  • The stock exploded, running up about 800% on the news. It had gained more than 1,300% on the month to close Wednesday at $26.63, and is now trading at more than $40. As recently as Nov. 16, the stock had hit a low of -$0.44, before recovering to close at $1.72;
  • Now other shorts will scramble to cover their positions, leaving Shkreli and others who are long the stock with all the pricing power.

The lessons … grasshopper if a CEO … CONTROL the borrowing of shares <how many times have I mention this issue at least 22 finger counts>!!

 

 

Who was UP – top 5:

  • bluebird bio (BLUE) closed up +$3.13 to $92.60;
  • Mesoblast (MESO) +$1.25 to $6.82;
  • uniQure (QURE) +$0.93 to $22.50;
  • Cellectis (CLLS) +$0.82 to $34.12;
  • Regenxbio (RGNX) closed up +$0.48 to $24.78

 

 

Who closed down – top 5:

  • Spark Therapeutics (ONCE) closed down -$0.78 to $59.72 – on news of an offering;
  • Kite Pharma (KITE) -$0.57 to $86.43;
  • Aduro biotech (ADRO) -$0.30 to $31.17;
  • Capricor (CAPR) -$0.26 to $4.34;
  • Juno Therapeutics (JUNO) closed down -$0.24 to $56.33

 

 

Flat:

  • Athersys (ATHX) at $1.05;
  • Northwest Bio (NWBO) at $4.70;
  • Opexa (OPXA) at $4.09;
  • ReNeuron (RENE.L0 at $3.00;
  • Verastem (VSTM) at $2.22

 

 

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.