August 18, 2016 6:30am
… The beginning of the third quarter is driven by Q2’s financial results/earnings that cause uncertainty; wait for the digestion to identify opportunity
By keeping an eye on pricing risk and cash positions i.e. need for financing in the short term
Companies in my headlights: CLLS, PSTI and STEM
I answer one question; in which company should investors put, keep and commit their money!
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Indexes and ETFs: The IBB and the XLV are NOT indicating while the XBI (-0.02) is DOWN and the IWM is UP (+0.07) is UP
Dow futures are DOWN -0.06% and NASDAQ futures are DOWN -0.10%
U.S. stock index futures indicated a lower open on Thursday morning as traders eye the release of data and continue to digest the minutes of the last Fed meeting.
European stocks traded higher as markets digest minutes of the U.S. Fed's July meeting.
Asian markets were mixed with Japanese shares dropping in the session as a stronger yen weighed on sentiment.
Data docket: Jobless claims and the Philly Fed Index will be released at 8:30 a.m. ET. Leading indicators are set to be released at 10:00 a.m. Fed speakers on Thursday include San Francisco Fed President John Williams, Dallas Fed President Robert Kaplan, and New York Fed President William Dudley.
The stem, cell, gene and regenerative therapy (SCG&RT) sector closed NEGATIVE on Wednesday and Tuesday, POSITIVE on Monday, Friday and last Thursday.
The SCG&RT sector’s record after the last 5 days (of 43 covered companies):
- Wednesday closed NEGATIVE with 33 decliners, 9 advancers and 1 flat;
- Tuesday closed NEGATIVE with 28 decliners, 12 advancers and 3 flats;
- Monday closed POSITIVE with 13 decliners, 28 advancers and 2 flats;
- Friday closed POSITIVE with 14 decliners, 27 advancers and 2 flats;
- Last Thursday closed POSITIVE with 13 decliners, 27 advancers and 3 flats;
Remembering Wednesday’s closing post, “Our” universe was been sucker-punched by perceived trading and unforeseen trading forces – ETFs and algorithms which has led to precipitous plunges. Remember, August tends to be a period in which investors take vacations and is typically associated with sluggish market activity.”
- There were not any earnings surprises to me – most were expected to cause predictable moves in sector stock’s pricing, up and down and the reverse.
But since the resulting move is often exaggerated, a reversal should occur upon financial results/earnings or I as call “loss-per-share” digestion post the summer dog-days of August.
- Historical volatility can affect price behavior after earnings surprises. This is viewed not only in the degree and speed on price changes, but also in the typical daily breadth of trading.
Several important signals were evident especially cash positions. The number of companies with less than six months of cash or whose “runways” could extend to Q1/17 increased.
- For those “in need” expect the usual discount and dilution and warrant expectation upon any financing.
Except sometimes the reversal doesn’t arrive on schedule. What signals can you then rely on to time trades based on earnings surprises?
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 Wednesday down -0.07% and is NOT indicating in Thursday’s pre-market;
- The SPDR S&P Biotech ETF (XBI) closed Wednesday down -0.53% and is DOWN -0.02% in Thursday’s pre-market;
- The Health Care Select Sector SPDR ETF (XLV) closed up Wednesday +0.22% and is NOT indicating in Thursday’s pre-market;
- The iShares Russell 2000 (IWM) closed down -0.29% on Wednesday and is UP +0.07% in Thursday’s pre-market.
Companies in my headlights:
Cellectis SA (CLLS) closed DOWN -$0.73 to $27.14. CLLS is oversold as the past five day’s reflected by pricings of $27.87, $28.23, $27.59 and $27.02. The aftermarket indication is positive +$0.12 - BUY
Pluristem (PSTI) closed UP +$0.02 to $1.68 following Tuesday’s $1.66 (+$0.07). PSTI experienced a new high that usually never lasts. It’s about investor perception and it “ain’t” positive … Maintaining SELL;
StemCells (STEM) closed DOWN -$0.76 to $1.84 after Tuesday’s $2.60 (+$2.2278 or +598.55%) after announcing a merger agreement. The run-up was TOO extreme making it a target for profit taking initiatives as day traders were the major influence in its past pricing. The aftermarket indication is negative -$0.02 – Maintaining SELL;
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.
