Higher open expected; RMi’s analysis, an upside beckons

May 20, 2016 7:20am

Pricing fluctuations got wider as option expiration hits today

Indexes and ETFs: the IBB, XBI and IWM are up; the XLV is down

Companies mentioned: CLLS, HSGX, KOOL, ONCE and VSTM

I say today what others won't, so you can do what others can't; whether information or intelligence is good, bad or somewhere in between – it defines the who, when, where, which and what of it …

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Where are today’s markets going? 

Dow futures are UP +0.24% and NASDAQ futures are UP +0.31%

U.S. stock index futures were higher on Friday morning as traders looked towards the release of existing home sales and comments from Fed Governor Daniel Tarullo.

European stocks rallied despite hawkish comments from a U.S. Fed official and following April Fed minutes that raised the probability of a rate hike in June.

Most Asia markets were moderately higher, retracing earlier losses, in a muted reaction to a fresh stream of hawkish commentary from U.S. Federal Reserve officials.

Data docket: Existing home sales are scheduled to be released at 10 a.m. Fed Governor Tarullo is set to speak at 9 a.m. ET at the National Association of Insurance Commissioners International Insurance Forum in Washington, D.C.

The stem, cell and gene therapy regenerative medicine (SCGT&RM) sector closed NEGATIVE on Thursday, POSITIVE on Wednesday, NEGATIVE on Tuesday, POSITIVE on Monday and NEGATIVE on last Friday.

The stem, cell and gene therapy regenerative medicine sector’s record after the last 5 days (of 43 covered companies):

• Thursday closed NEGATIVE with 35 decliners, 5 advancers and 3 flats;
• Wednesday closed POSITIVE with 15 decliners, 25 advancers and 3 flats;
• Tuesday closed NEGATIVE with 26 decliners, 13 advancers and 4 flats;
• Monday closed POSITIVE with 12 decliners, 27 advancers and 4 flats;
• Last, Friday closed NEGATIVE with 22 decliners, 15 advancers and 6 flats;

Connecting the dots of last night stand-outs – look for reverses of share pricing:

• uniQure (QURE) closed down -$0.62 to $12.06;
• bluebird bio (BLUE) -$0.56 to $38.83;
• Applied Genetic Technology (AGTC) -$0.55 to $15.2;
• Juno Therapeutics (JUNO) -$0.38 to $39.30;
• Regenxbio (RGNX) closed down -$0.33 to $11.92;
• Spark Therapeutics (ONCE) closed up +$5.94 to $47.17;
• Cesca Therapeutics (KOOL) +$1.60 to $3.61;

Recapping the week – get the drift?

• Thursday’s closing theme: “The resistance, we are seeing is just another thread of weakness as expressed by sentiment and conveyed by algorithms”;

• Wednesday’s closing theme: “All I see are short-term, kneejerk reactions as the iShares Nasdaq Biotechnology ETF (IBB) climbed 1.39%.”

• Tuesday’s closing theme: “The issue for many companies in “our” universe is a case of investment that’s staying in the sector, or has left the sector and may not be coming back.”

• Monday’s closing theme: “Our universe will often provide many surprises with one or even two up days but, those are cut by the five to six day slides as the sector shakes many investors out of their positions, and leaves this market to traders and algorithms to “control” our investments!”

In case you missed it: “Some of us think holding-on makes us strong; but sometimes it is <about> letting go” … Hermann Hesse.

• Are you surprised by choppy stock trading – I wasn’t, Thursday index options ceased trading while algorithms could be blamed for the bouts of volatility!

I kept saying “Sell in May and go away” was not an axiom for this year.  Current headwinds in this month are making share pricing growth difficult. As share pricing continues to seek lower altitudes there could be a pick-up of tailwinds which means “our” universe will have more time to evolve and develop.

• Thus, the advent of tailwinds could be a catalyst for future share price appreciation and there are a number of seats left on the plane!

You’ve made it to the office, turned on the monitor, having just gotten your coffee and it hits you - what could be today’s trades?  Watch list:

• The iShares Nasdaq Biotechnology (IBB) closed Thursday down -1.47% and is UP +0.48% in Friday’s pre-market;

• The SPDR S&P Biotech ETF (XBI) closed Thursday down -1.05%  and is UP +0.51% in Friday’s  pre-market;

• NASDAQ Biotechnology (NBI) closed down Thursday -1.44%;

• The Health Care Select Sector SPDR ETF (XLV) closed down Thursday -0.85% and is DOWN -22% in Friday’s pre-market;

• The iShares Russell 2000 (IWM) closed Thursday down -0.81% and is UP +0.27% in Friday’s pre-market.

Companies in the spotlight;

• Cesca Therapeutics (KOOL) closed UP +$1.60 to $3.61 on the basis of one (1) patient treated. The patient was able to return to normal life two weeks after the AMIRST procedure, and the main findings of the study showed a significant improvement in the Left Ventricular Ejection Fraction from 35% at patient's initial assessment to 60.3% at 24 months post-AMIRST intervention. One patient does NOT make a TRIAL a success … but, it has made the company a target for a sell-off!  Be ready for a downward SLIDE … SELL;

• Cellectis SA (CLLS) closed DOWN -$0.08 to $29.25 after Wednesday’s -$0.55 or $29.33 followed by Tuesday’s $29.88, Monday’s $31.39 after last Friday’s $30.00 which bodes quite differently from 5/9’s $33.38 – oversold.  I’d bet the potential upside – Maintaining BUY;

• Histogenics (HSGX) closed DOWN -$0.13 to $1.84. HSGX is trading for less than its cash position of $2.34. Oversold – BUY;

• Spark Therapeutics (ONCE) closed UP +$5.94 to $47.17 after Wednesday’s +$4.11. The week has provided an appreciative run after Wednesday’s $41.23, Tuesday’s $37.12, Monday’s $36.76 following last Friday’s $33.51.  Traders will be skimming the “book” of profit and the after-market indication is down – Maintaining SELL;

• Verastem (VSTM) closed DOWN -$0.04 to $1.37. Another equity trading for less than its cash position of $2.69. Oversold – BUY;

Opinions expressed are those of the author and are subject to change, and are 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.

Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.