July 12, 2016 7:30am

Sentiment, volume, momentum, breathe, relative strength etc., etc.

… Valuation metrics do not signal market tops or bottoms and they DON’T have a predictive value of short or near-term return.

 

When valuations get this high it means the risks are also high.

 

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Companies in the headlights: AGTC, BLFS, JUNO, KITE and MDXG

Indexes and ETFs: The IBB (+0.61)  and IWM (+0.65%) are UP and the XBI and XLV are NOT indicating

 

Dow futures are UP +0.44% and NASDAQ futures are UP +0.51%

 

U.S. stock index futures pointed to a higher open, building on Monday's extended jobs report-fueled rally when the S&P 500 closed at an all-time high and the Dow hit 2016 highs.

European stocks extended gains as uncertainty over the U.K.'s political scene diminished following news of the imminent appointment of Home Secretary Theresa May as U.K. prime minister.

Asian markets finished higher, with the Nikkei extending a banner rally as stimulus comments made by Japanese Prime Minister Shinzo Abe late on Monday helped to weaken the yen.

 

 

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

The SCG&RT sector’s record after the last 5 days (of 43 covered companies):

  • Monday closed NEGATIVE with 25 decliners, 16 advancers and 2 flats;
  • Friday closed POSITIVE with 13 decliners, 29 advancers and 1 flat;
  • Thursday closed POSITIVE with 15 decliners, 24 advancers and 4 flats;
  • Wednesday closed POSITIVE with 19 decliners, 22 advancers and 2 flats;
  • Last, Tuesday closed NEGATIVE with 29 decliners, 13 advancers and 1 flat;

 

 

Remembering Monday’s post, “Don’t get TOO comfortable with sector stocks …the issue for the week will be how many of the recent upside sector stock prices will start to look risky?”

  • The most dangerous thing about investing in the stem, cell, gene and regenerative therapies’ sector right now is valuations.

There are several ways to measure valuations, but no matter which metric you choose, stocks are expensive on both a relative and historic basis.

  • Some analysts have been taking advantage of investors by the use of discounted cash flows and have not been totally transparent in defining the “true” status of warrants in recent reporting.

When valuations get this high it means the risks are much higher too.

 

Sell into the rallies, trim allocation and come back to BUY another day!

 

 

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 Monday down -0.21% and is DOWN -0.61% in Tuesday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) closed Monday down -0.38% and is NOT indicating in Tuesday’s  pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) closed down Monday -0.27% and is NOT indicating in Tuesday’s pre-market;
  • The iShares Russell 2000 (IWM) closed Monday up +1.35% and is UP +0.65% in Tuesday’s pre-market.

 

 

Companies in my spotlight:

Applied Genetic Technologies (AGTC) closed UP +$0.16 to $15.97 after Friday’s $15.81(+$0.24) after being UP on Thursday to $15.57 (+$0.16) after Wednesday’s close of $15.41 (+$0.69) and last Tuesday’s close at $14.72. AGTC is a very polarized equity; many love it to ultimately trade it – Maintaining SELL;

BioLife Solutions (BLFS) closed UP +$0.80 after announcing a 10 year contract with KITE. The aftermarket indication is DOWN -$0.07. I also believe that BLFS has more problems i.e. “a going concern issue”.  At the end of 3/31/16, BLFS had $1.66 M in cash and is spending $8.832 M per quarter <$1.379 M for R&D and $7.543 M in SG&A expenses> offset by a gross profit from revenue of $3.814 M. Strong SELL;

Juno Therapeutics (JUNO) closed DOWN -$0.48 to $27.33 following Friday’s to $27.81(-$13.01) after being UP on Thursday +$0.88.The aftermarket indication is +$0.12 after its leukemia trial had been put on clinical hold after patients died.  Ahead of Friday’s move, JUNO had underperformed the broad markets, with the stock down about 7% year to date. Over the past 52 weeks, the stock is down 17% –SELL to BUY;

Kite Pharma (KITE) closed DOWN -$0.85 to $47.68 after Friday’s $48.53 (-$3.57). It is time for KITE to get beyond the pain of JUNO’s trial’s halt. The aftermarket indication is positive and +$0.01 –SELL to BUY;

MiMedx (MDXG) closed DOWN -$0.08 to $8.17. MDXG reported Q2 revenue of $57.3 M versus $56.20 M which exceeded the upper end of the guidance range. Prior 2016 guidance: Adjusted EPS estimated to be in the range of $0.30-0.32 versus $0.30 consensus.  The aftermarket indication is +$0.60. BUY

 

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.