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Cyclicals Lead Markets Higher Tuesday In A Tale Of Two Tapes

By John F. Heerdink, Jr.

It was another tale of two tapes again today for the markets. We began the session in the red then proceeded to experience somewhat of a banner day ending soundly in the green. During the first part of the trading session, the markets digested negative headlines that surfaced from the financial sector as high profile banks reported larger than expected Q2 provisions for credit losses. i.e. JPMorgan Chase (JPM), Citigroup (C ), & Wells Fargo (WFC). The heavily weighted FAANG stocks were also moving lower again following yesterday’s selloff, but then the markets hit a second gear and they rose throughout the balance of the day ending as follows: Facebook (FB) closed at $239.73/share up  .31%, Amazon (AMZN) closed at $3,084/share down .64% (had dropped as much as 5% in intraday trading),  Apple (AAPL) closed at $388.23/share up 1.65%, Netflix (NFLX) dropped .12% closing at $524.88/share & Alphabet (GOOG) closed at $1,520.58/share up .61%.

On the macroeconomic front, we received a couple of somewhat positive reports as follows: The Consumer Price Index (CPI) for June moved up .6% month/month and when excluding food and energy, the CPI moved up .2% month/month. This is significant because it was the first move higher since this past February. Also, the NFIB Small Business Optimism report for June jumped to 100.6. 

As a result, all indices finished in the green. The Dow 30 had a great day rising 2.13% as it closed at 26,642.59.  The Nasdaq rebounded .94% closing at 10,488.58.  The S&P 500 rose 1.34% closing at 3,197.52 with the recently hammered cyclical sectors leading the way. The energy sector was up 3.6%, the materials sector was up 2.5%, and the industrials sector was up 2.2% led the way.  The Russell 2000 snapped back too with a 1.76% move up to 1,428.26.

Gold closed above the $1800 mark again at $1,811(+8) & silver prices closed above $19 at $19.51/oz (+..07). North American silver and gold producer Hecla Mining Company (HL) closed at $4.23/share up a sizable 10.44% after establishing a new 52-week high of $4.25/share. HL’s 52-week low is $1.38.

Oil prices moved up .4% closing at $40.24/bbl. Energy leaders Chevron (CVX) closed at $88.35/share up 3.45%, Exxon (XOM) closed at $44.07/share up 3.31% & highly leveraged Occidental Petroleum Corporation (OXY) closed at $16.68/share up 3.22%. Midstream player, Enterprise Products Partners (EPD), closed trading at $17.09/share down .23% and is currently sporting an attractive $1.78/share dividend or 10.32%.  

The 2-yr US treasury yield closed down 1 basis point at .15% while the 10-yr yield closed down 3 basis points at .62%. The U.S. Dollar Index weakened by .2% to end at 96.29. 

TODAY’S MOVERS 

Here’s a number of other equities that moved significantly higher today:

  • Shares of Moderna (MRNA) rose 4.54% closing at $75.04/share moving higher again after Jeffries analyst stated that they expect the FDA to approve its COVID-19 vaccine and sees that over $5B of vaccine sales while simultaneously the company is being added to the NASDAQ 100.
  • Shares of INmune Bio, Inc, (INMB) closed at $15.75/share up 77.97% after reaching an all-time new high of $24.42/share in intraday trading. INMB announced interim phase 1b data demonstrating that XPro1595 decreases neuroinflammation in patients with Alzheimer’s Disease.
  • Shares of Sunrun Inc. (RUN) jumped 12.26% closing at $33.78/share. Recently, Sunrun and Vivint Solare announced that they would be merging.

TOMORROW

The macroeconomic calendar will deliver the Industrial Production and Capacity Utilization report for June, the Export and Import Prices report for June, the Empire State Manufacturing Index report for July, & the weekly MBA Mortgage Applications Index report.

WATCH LIST

  • Atossa Therapeutics (NASDAQ: ATOS) closed at $3.57/share up 6.25% today. 
    • Interest continues to swell around both their breast cancer treatment and two COVID-19 drug programs.

    • Their stock has seen positive trading volatility this year and has moved up from $.76/share on significantly increasing trading volume.

    • I would expect to see some form of clinical progress update from ATOS as soon as this week.

    • Last week ATOS announced that it hired key personnel in clinical, regulatory, and chemistry manufacturing and controls (CMC). The new hires include Heather Fraser, Ph.D., as vice president of clinical, regulatory, and CMC; Natalie Farris, MS, as senior director of CMC; and Devon Payne as director of clinical operations. “Hiring of these talented and accomplished individuals will help accelerate the advancement of our development pipeline, which includes programs in breast cancer and COVID-19. We welcome Heather, Natalie, and Devon to Atossa and look forward to their important contributions as we execute on our value-creation strategy,” commented Steven Quay, M.D., Ph.D., president, and CEO of Atossa.  
  • Shares of Fate Therapeutics (FATE) closed at $34.02/share up 2.44% and up from its 52-week low of $12.59 but lower than the recently achieved new all-time high of $38.52/share.
  • Fate is a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders

  • On July 9 Fate announced that the U.S. Food and Drug Administration (FDA) cleared the Company’s Investigational New Drug (IND) application for FT819, an off-the-shelf allogeneic chimeric antigen receptor (CAR) T-cell therapy targeting CD19+ malignancies. FT819 is the first-ever CAR T-cell therapy derived from a clonal master induced pluripotent stem cell (iPSC) line, and is engineered with several first-of-kind features designed to improve the safety and efficacy of CAR T-cell therapy. The Company plans to initiate clinical investigation of FT819 for the treatment of patients with relapsed / refractory B-cell malignancies, including chronic lymphocytic leukemia (CLL), acute lymphoblastic leukemia (ALL), and non-Hodgkin lymphoma (NHL).

  • On June 11th, FATE announced that it had closed an underwritten public offering of 7,108,796 shares of its common stock, which included 927,324 shares that were issued pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $28.31 per share. Aggregate gross proceeds from this offering, including the exercise of the option, were approximately $201.3 million, prior to deducting underwriting discounts and commissions and estimated offering expenses. 
  • Shares of Neubase Therapeutics (NBSE) closed at $7.94/share up 1.4% today after reaching a new 52-week high recently of $11.78/share.

    • RBC Capital Markets recently initiated coverage of NBSE today with an Outperform, Speculative Risk rating & a $16 price target. 

    • As we have been stating, we are following Neubase Therapeutics (NBSE) for a number of reasons including its development of a modular antisense peptide nucleic acid (PNA) platform with the capability to address rare genetic disease caused by mutant proteins with a single, cohesive approach.

    • NBSE was added to the Russell 3000 recently.

  • Shares of Aduro (ADRO) closed at $2.71/share today down .37%.
    • On June 2nd, Aduro Biotech, Inc.(ADRO) and Chinook Therapeutics, Inc., a privately-held clinical-stage biotechnology company focused on the discovery, development, and commercialization of precision medicines for kidney diseases, today announced that the companies have entered into a definitive merger agreement pursuant to which Aduro will acquire all of the outstanding capital stock of Chinook in exchange for shares of Aduro common stock representing approximately 50 percent of Aduro’s outstanding common stock immediately following completion of the transaction. The combined company is expected to have approximately $200 million in cash, cash equivalents, and marketable securities at closing, including $25 million in additional financing committed by Chinook’s existing investors. Following closing, which is expected to occur in the second half of 2020, Aduro will be renamed Chinook Therapeutics, Inc., and is expected to trade on the Nasdaq Global Market under the ticker symbol “KDNY”.
    • Recently, ADRO announced that the first patient with IgA nephropathy has been dosed in a Phase 1 clinical trial of BION-1301, an investigational humanized IgG4 monoclonal antibody that blocks APRIL binding to both the BCMA and TACI receptors. “We are thrilled to have dosed the first patient with IgA nephropathy in the Phase 1 clinical study of our investigational anti-APRIL antibody, BION-1301,” said Dimitry S.A. Nuyten, M.D., Ph.D., chief medical officer of Aduro. “The data Aduro recently presented from Parts 1 and 2 of this study in healthy volunteers at the 57th ERA-EDTA Virtual Congress indicated BION-1301 was well-tolerated, had a half-life of approximately 33 days, achieved over 90% target engagement with a single 450 mg dose of BION-1301 and demonstrated dose-dependent and durable reductions in IgA and IgM levels, and to a lesser extent, IgG levels. We look forward to hopefully replicating this effect in addition to exploring BION-1301’s disease-modifying potential in patients with IgA nephropathy in Part 3 of the ongoing Phase 1 clinical study.”
  • Shares of INVO Bioscience (INVO) closed at $3.73/share up 3.61%.
    • Industry forecasts suggest that only 1% to 2% of the estimated 150 million infertile couples worldwide are currently being treated
    • INVO’s mission is to increase access to care and expand infertility treatment across the globe with a goal of improving patient affordability and industry capacity. 
    • Recently, a spotlight report was published by Birmingham, Alabama-based America Institute of Reproductive Medicine (AIRM) highlighting the success achieved in their practice utilizing INVOcell. INVO’s INVOcell® is the world’s only in vivo Intravaginal Culture System. “The AIRM clinic became an early adopter and advocate for the use of INVOcell shortly after we received FDA-clearance. We appreciate their willingness to share their story of that successful implementation of INVOcell within their clinical practice, which highlights important aspects of our INVOcell technology solution,” stated Steve Shum, CEO of INVO Bioscience. You can review the report here. 
    • I am expecting to see the company begin to push forward with new market supportive initiatives as they have recently been fueled up by financing that may result in further adoption in the US clinics and establishing new joint ventures, partners, and distributors throughout the world.
  • TransEnterix (TRXC) closed trading at $.3046/share.
    • TRXC is a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery.
    • Last week, TRXC announced the closing of $15M registered direct common share offering at $.35/share.
    • The stock has already bounced once post the deal above the $.42 cent level and also swiftly came down from the dollar level prior to the deal. 

Economic Reports

  • On Monday, we received the Treasury Budget which was confirmed to have experienced an $864.1B deficit for the month of June as tax the filing deadline had been extended to July 15th & COVID-19 shutdown stimulus measures pushed forward

Investing & Inspiration

 

 

“An investment in knowledge pays the best interest.” – Benjamin Franklin.

I believe the returns on investment in the poor are just as exciting as successes achieved in the business arena, and they are even more meaningful!” -Bill Gates

“Every portfolio benefits from bonds; they provide a cushion when the stock market hits a rough patch. But avoiding stocks completely could mean your investment won’t grow any faster than the rate of inflation.” – Suze Orman

“The tax on capital gains directly affects investment decisions, the mobility, and flow of risk capital… the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” – John F. Kennedy

“If all the economists were laid end to end, they’d never reach a conclusion.
-George Bernard Shaw

“The riskiest thing we can do is just maintain the status quo.
I get up at 4:30 in the morning, seven days a week, no matter where I am in the world. I think it is important for people who are given leadership roles to assume that role immediately. What I’ve really learned over time is that optimism is a very, very important part of leadership.” Bob Iger, Ceo of Disney

“There are old traders and there are bold traders, but there are very few old, bold traders.”-Ed Seykota

“Let this scenario play out on its own, in its own fashion. As you watch it unfold, you will soon be grateful that you choose the peaceful path. Remember — those who live by the sword, die by the sword.”

“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” -Jim Cramer

“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.” -Philip Fisher

“I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.” -Richard Dennis

“The four most dangerous words in investing are: ‘this time it’s different.” -Sir John Templeton

“Money doesn’t make you happy. I now have $50 million but I was just as happy when I had $48 million.” -Arnold Schwarzenegger

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