November 2, 2017 7:44am
Wading into the “earnings” quagmire, as equities are stuck in a soft miry land that shakes or yields under quarterly results
Leaving investors in difficult, precarious and entrapped positions
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Pre-open trading indications: 8 SELLs and 0 BUY
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How right does one have to be? You could and should be reading this review of the day’s share pricing activity.
What’s the gauge of pricing expectation – monetization of information!
Weak open expected
Dow futures are DOWN -0.04% (-10 points) and NASDAQ futures are DOWN -0.04% (-2.25 points)
U.S. stock index futures pointed to a slightly lower open Thursday, as investors geared up for more earnings and awaited any key news concerning the U.S. central bank.
European stocks hovered around the flat line in early trade as investors reacted to a slew of earnings news and waited for the latest rate decision from the Bank of England (BOE).
Asian indexes slid even though a broad index of equities in the region clung to slight gains. Investors also digested the Federal Reserve's decision to keep interest rates steady.
Issues that will affect the trading day: Republicans are running into difficulties reaching consensus on the tax cuts and that the expected corporate tax cuts to 20% from 35% only would be temporary. Earnings and President Donald Trump is expected to announce his pick for the 2018 head of the U.S. Federal Reserve. Fed Governor Jay Powell has been a recent favorite to take on the position from current Chair Janet Yellen — who's also a key candidate — in early 2018.
Data docket: jobless claims, and productivity and costs data are set to be released at 8:30 a.m. EDT.
The cell therapy sector closed NEGATIVE on Wednesday, Tuesday and Monday, POSITIVE on Friday, NEGATIVE and last Thursday.
The cell therapy sector’s record over the last 5 sessions (of 43 covered companies):
· Wednesday closed NEGATIVE with 27 decliners 14 advancers and 2 flats;
· Tuesday closed NEGATIVE with 23 decliners, 17 advancers and 3 flat;
· Monday closed NEGATIVE with 28 decliners, 13 advancers and 2 flats;
· Friday closed POSITIVE with 12 decliners, 29 advancers and 2 flats;
· Last Thursday closed NEGATIVE with 27 decliners, 10 advancers and 6 flat;
Henry’omics:
From Wednesday night’s closing bell post, “a perilous pattern to open up, dump by 11:30 am and close to the downside, yet again as the IBB (-0.63%) and XBI (-1.40%) deserted the sector. It’s not just “earnings” season, resistance extends the downside for risk.”
Reiterating, “I see valuations of some stocks as serious warning signs for the health of the sector as investors are exposed to the frothier edges of risk!”
U.S. stock futures inched lower Thursday, as traders took a cautious approach ahead of two closely watched events expected to finally land: Trump’s choice of Federal Reserve Chairman and the unveiling of a House Republican tax bill.
Which sides do you realize - the upside or the down for today’s sector potential …?
Just past a few Q results, we are till left stuck in the mud or with deep waders … anticipating the further deluge!
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) is indicating a NEGATIVE -0.17% in Thursday’s pre-market;
- The SPDR S&P Biotech ETF (XBI) is indicating a NEGATIVE -1.4% in Thursday’s pre-market;
- The Health Care Select Sector SPDR ETF (XLV) is indicating a POSITIVE +0.25% in Thursday’s pre-open;
- The iShares Russell 2000 (IWM) is indicating a NEGATIVE -0.14% in Thursday’s pre-open
Companies in my headlights:
Applied Genetic Technologies (AGTC) closed up +$0.15 to $3.55 with 176.8 K shares traded after Tuesday’s -$0.30 to $3.40 with 301.4 K shares traded <3 month average = 162.6 K shares>. It has been a BAD month for AGTC as October started at $4.10 and it continues as quarterly results are due 11/7. Until “earnings” on 11/7 with their loss per share numbers, status of clinical trial enrollment issues and status are resolved - Maintaining SELL;
Athersys (ATHX) closed down -$0.05 to $1.79 after Tuesday’s -$0.02 to $1.84 with 463 K shares traded after Monday’s -$0.05 to $1.86 with 361.3 K shares traded. October started at $2.19, saw a low of $1.84 and a high of $2.45. I expect they will announce a bigger loss due to the patent infringement settlement i.e. $500 K and stock payments and a need to finance. Nothing will be resolved until 11/8 when the “earnings” call rings to illuminate the past Q and the plans of the future unfolds – Maintaining SELL;
AxoGen (AXGN) closed up +$0.05 to $20.60 after Tuesday’s +$0.40 to $20.55 with 340.1 K shares traded after Monday’s +$0.05 to $20.15 with 209.3 K shares traded after Friday’s flat at $20.10 with 302.8 K shares traded <3 month average = 214.4 K shares>. October started at $19.10 with a low of $18.50. Ended the quarter with $22 million in cash, a reduction of $1.8 million from the end of Q2/17 with $25 million of total bank debt, unchanged from the end of Q2 2017. AxoGen shares have more than doubled since the beginning of the year. In the final minutes of trading on Wednesday, shares hit $20.60, more than doubling in the last 12 months. – Maintaining SELL;
bluebird bio (BLUE) closed down -$2.50 to $139.10 with 549.3 K shares traded after Monday’s up again +$0.80 to $141.60 with 434 K shares traded after Friday’s +$4.20 to $140.80 with 898.7 K shares traded <3 month average = 826.8 K shares>. Last week started out at $140.35 which was down -$2.20 from the previous Friday, while October started out at $125.45 which was down -$1.19 from September’s month end with the month’s high of $143.30. Net loss was $78.8 million for Q3/17 compared to $77 million for Q3/16. Cash, cash equivalents and marketable securities as of 9/30/17 were $1.1 billion, compared to $884.8 million as of 12/31/16, an increase of $257.8 million. The aftermarket indication is a negative -$1.10 or -0.79% – Maintaining SELL;
Capricor (CAPR) closed down -$0.13 to $2.35 after Tuesday’s +$0.10 to $2.48 with 1.08 M shares traded <3 month average = 1.96 M shares> after Monday’s -$0.02 to $2.38 with 238.4 K shares traded. October started at $3.45 and has seen a continuous decline with a low of $2.20; HC Wainwright announced 10/31/17 a $14 M at-the-market financing for CAPR. NO pricing or advance notice to shareholders. Questionable status - Maintaining SELL;
Fate Therapeutics (FATE) closed down -$0.08 to $4.69 with 259.7 K shares traded <3 month average = 152.8 K shares>. FATE reported a loss of $10.7 million or -$0.26 per share with the results falling short of street expectations. The average estimate of five analysts was for a loss of $0.25 per share. Although FATE posted revenue of $1 million in the period, matching “street” forecasts. Cash, cash equivalents and short-term investments as of 9/30/17 were $69.2 million compared to $92.1 million as of 12/31/16. The decrease was primarily driven by FATE’s use of cash to fund operating activities and to service principal and interest obligations under its loan agreement with Silicon Valley Bank. This use was offset by $7.5 million in net cash proceeds received in July 2017 in connection with the amendment of its loan agreement with Silicon Valley Bank. In the final minutes of trading on Wednesday, the company's shares hit $4.69. A year ago, they were trading at $2.08. The aftermarket indication is a negative -$0.13 or -2.77% - SELL;
Juno Therapeutics (JUNO) closed up +$3.40 to $48.31 after Tuesday’s -$1.38 to $44.91 with 1.98 M shares traded <3 moth average = 2.64 M shares>. The aftermarket indication is a positive +$0.395 or -2.83% – SELL;
Stemline (STML) closed up +$0.30 to $13.95 with 971.8 K shares traded after Tuesday’s +$3.10 to $13.65 with 3.06 M shares traded after Monday’s -$0.25 to $10.55 with 164.4 K shares traded <3 month average = 191.7 K shares>. The aftermarket indication is a negative -$0.15 or -1.08%, shooting stars seem to burn out fast as traders seek the quick profit– BUY to SELL;
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.
