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Record Market Expansion Registered As Investors Surfed Past Political Chaos This Week

By John F. Heerdink, Jr.

Overall, we had a sad showing in the US this week as hooligans charged Capitol Hill placing us on the worldwide map as an embarrassment to all that hold an appreciation for democracy, and I suppose for those that do not. However, we have experienced other low moments in our nation’s history and have been resilient in the past, so I believe that the we will pull through this low point and begin to show better as we catch a kinder wave moving forward. 

WEEKLY RETURNS

As for the markets, in our first full week of trading in 2021, investors shrugged off the political issues as more buyers than sellers showed up in the markets & we smashed records across all indices. The Russell 2000, which suffered a 1.5% pullback last week, enjoyed a monster week ending at 2,091.66, +5.9%wk/wk. The tech-heavy Nasdaq Composite closed at 13,201.98, +2.4% wk/wk. The S&P 500 closed at 3824.68 (+1.8%) wk/wk. The big boys on the Dow ended at 31,097.97 (+1.6%) wk/wk while breaking the 31k mark for the first time ever. We also saw incredible moves in companies that we all know well like Tesla (TSLA) which achieved a new all time high of $884.49 ($705.67/share last Friday) and other names that do not roll readily off of our tongues i.e. Jaguar Health (JAGX) which we entered into in December 2020 in the +$.30 range & which ended the week amazingly at $4 or up ~13x.

The overall positive week in the markets saw a majority of the the sectors end in the green with the energy sector leading the pack jumping 9.3% as oil prices closed at $52.25/bbl, +8.3%. Supporting the move in energy, Saudi Arabia played another one of its production cutting games again confirming an additional 1M barrels/day oil will be cut in February and March.  Also, seeing sizable gains, the materials sector rose 5.7%, the financials sector jumped 4.7%, & the consumer discretionary sector added 3.8%.  The 4 sectors that dropped this week were the real estate sector (-2.6%), the consumer staples sector (-1%), the utilities sector (-.7%), & the communication services sector (-.3%) so it wasn’t all warm and fuzzies.

STIMULUS

While stimulus checks continued to roll out this week, the belief that further stimulus could hit our accounts this year entered investors psyche, as the Democrats grabbed the Senate majority after the two runoff victories in Georgia. However, Democratic Senator Joe Manchin (WV) put a little thorn in the stimulus party thinking as he stated on Friday that he will not support $2k stimulus checks & that if they should go out then they should be targeted to those who need it. President-elect Joe Biden also confirmed that he is set to propose a ‘complete’ economic package, as soon as, next week that will include a range of issues, but also suggested that the “price tag will be high.” In other words, expect higher taxes!

THE “MACRO”

The macroeconomic schedule also produced a number of overall bullish reports as follows this week: On Monday, the macro schedule delivered a couple of reports as the total construction spending report confirmed a rise by .9% in November while the total private construction spending report confirmed a move higher by 1.2% month/month. However, the total public construction spending report confirmed a drop by .2%. The December IHS Markit Manufacturing PMI report also showed a rise to 57.1. On Wednesday, the Factory orders for manufactured goods report which confirmed an rise by 1% in November exhibiting a rise in business spending. The ADP Employment Change report for December estimated that private-sector payrolls dropped by 123k. The December IHS Markit Services PMI report confirmed a drop to 54.8. The weekly MBA Mortgage Applications Index rose 1.7%. On Thursday, the ISM Non-Manufacturing Index report moved up to 57.2% in December moving higher than the economic expansion line. The Initial claims report for the week ending January 2 also confirmed a drop by 3k to 787k while continuing claims for the week ending December 26 dropped by 126k to 5.072M. The U.S. trade deficit moved wider to $68.1B in November pointing towards increased global trade. On Friday, the December employment report confirmed that nonfarm payrolls dropped by 140k. December private sector payrolls dropped by 95k. December unemployment rate was level at 6.7%. Consumer credit moved up by $15.3B in November. Wholesale inventories were also confirmed to have come in level in November.

COVID-19 UPDATE

The coronavirus epidemic continues to surge and hospitalizations rise as the US now has eclipsed 21.8 million cases, 367,458 deaths, and we are now realizing 300,000 new daily coronavirus cases a day. Let’s mask up folks and keep your distance to aid our system in the rollout of the vaccine. In the meantime, hopefully other therapy treatment programs from the biotech firms like Atossa Therapeutics (ATOS) will be sped though development by the FDA thus arming us with further tools to fight the virus should we get it. One of Atossa’s therapy programs is called the COVID-19 HOPE Program which uses AT-H201 for severely il patients to improve lung function and reduce the amount of time that COVID-19 patients are on ventilators and another called AT-301 Nasal Spray for at-home use immediately following diagnosis of COVID-19 to proactively reduce symptoms of COVID-19 and to slow the infection rate so that a person’s immune system can more effectively fight the virus.

TECH HIGHLIGHTS

The highly weighted FAANG’s ended down overall week-over-week, except for Alphabet: Facebook (FB) closed at $267.57/share, -.44% Friday & down from the $273.16/share close a week ago. Apple (AAPL) closed up .86% on Friday at $132.05/share and slightly down from $132.69/share a week ago. Amazon (AMZN) closed at $3,182.70/share, +.65% Friday & down from $3,256.93/share a week ago, Netflix (NFLX) closed at $510.40/share, +.3% Friday, down roughly $30 from the $540.73/share close a week ago, & Alphabet (GOOG) closed at $1,807.21/share, +.71% on Friday & up from $1,751.88/share a week ago. 

Shares of Microsoft (MSFT) closed at $219.62/share, +61% Friday but down from last Friday’s close of $222.42/share. Intel (INTC) closed at $51.67, -1.03% Friday but up from last Friday’s $47.07/share close.

Salesforce (CRM) closed at $222.04, +1.86% on Friday, basically in line with the close of $222.53 last Friday. 

Peter Thiel co-founded software firm Palantir Technologies (PLTR) closed at $25.20/share, +.8% on Friday and up from the $23.55/share close last week. 

ACROSS THE DOW 30

Johnson & Johnson (JNJ) closed at $160.04/share, -.21% & up from last week’s close of $157.38. Pharmaceutical giant Merck (MRK) closed at $83.03/share, -1.18% but up from last Friday’s close of $81.80/share. Merck an AstraZeneca’s cancer drug LYNPARZA won 3 new approvals in Japan last week.

Shares of Coca-Cola (KO) closed at $51.08/share down from last Friday’s close of $54.84/share. Shares of Disney (DIS) closed at $178.69/share, +.06% on Friday but down from last Friday’s at $181.18/share. Shares of Nike (NKE) closed at $146.35/share up from last Friday’s close at $141.47/share. Walmart (WMT) closed at $146.63/share up again from last Friday’s close of $144.15/share.

Shares of Deere (DE) closed at $293.91/share,-1.94% & significantly up with last week’s close of $269.05/share & Caterpillar (CAT) closed at $194.26/share,+.02% up nicely from last Friday’s close of $182.02/share.  

Boeing (BA) closed $209.90 down again from last Friday’s close of $214.06/share after having to pay $2.5 billion to settle the 737 Max criminal probe.

FINANCIALS

The financials sector had another good week as it moved up another +4.9%. Within the sector we saw the shares of Goldman Sachs (GS) close trading at $290.08/share nicely up again from last Friday’s close of $263.71/share, American Express (AXP) closed at $121.78/share up from the $120.91/share close last Friday, Visa (V) closed trading at $215.45/share down from the $218.73/share close last Friday & shares of Morgan Stanley (MS) closed at $75.25/share up from last Friday’s close of $68.53/share. JPMorgan Chase (JPM) closed at $136.02 up from the $127.07/share close last Friday & Citigroup (C) $65.37/share up again from the close of $61.66/share last week. PayPal Holdings (PYPL) closed at $242.46/share bouncing up from last Friday’s close of $234.20/share and Square (SQ) closed at $241.45 regaining some mojo and up from last week’s close of $217.64/share.

GOLD & SILVER MARKETS

Gold prices closed at $1849 down from the $1,898/oz. close last week. This Friday silver prices closed at $25.47/oz. down from the $26.47/oz. close last Friday. Barrick Gold Corp. (GOLD) closed trading at $23.97 up from last Friday’s close of $22.78/share. North American silver and gold producer Hecla Mining Company (HL) ended the week at $6.08/share down from last Friday’s close of $6.48/share. Hecla recently announced Q3 2020 financial and operating results. Phillips S. Baker, Jr., Hecla’s President and CEO stated, “Because of our strong operating performance and higher prices, Hecla had record adjusted EBITDA, generated the most free cash flow in a decade and repaid our revolver in full. These accomplishments were achieved because of our workforces’ resiliency and our commitment to health and safety. With the Lucky Friday ramp-up ahead of schedule, the expected improvements at Casa Berardi, and our modest planned capital expenditures, we are well positioned to further strengthen our balance sheet, increase exploration activities, and pay our enhanced dividend.” 

MONEY UPDATE

The U.S. Dollar Index weakened to end the week at 90.06 marginally up from 89.93 last Friday.  The 2-yr Treasury yield closed up one basis point for the week at .13%, the 10-yr yield moved up 19 basis points ending at 1.11% while the 30-yr yield ended at 1.877% up from 1.649% last Friday.

TRADING NEXT WEEK 

Another full week of trading is in line for us next week. The beginning of the earnings season will rev up its engines too.

NEXT WEEK’S KEY MACROECONOMIC DATA

The macroeconomic schedule will deliver the inflation report, retail sales report, & the industrial production report.

STOCKS IN VIEW NEXT WEEK

  • Shares of Natural-Killer cell (NKcell) focused biopharmaceutical firm Fate Therapeutics (FATE) closed at $116.31/share up from $90.93 last Friday after they announced the pricing of an underwritten public offering of ~$400 million. Jefferies, BofA Securities, SVB Leerink and Barclays acted as joint book-running managers for the offering.  We started with this one folks over 3 years ago when it was in the $3 range and it hit an all-time high of $103.66 recently.
    • Fate is a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders.
    • Recently, Fate presented a patient case study from the Company’s Phase 1 clinical trial of FT596, its universal, off-the-shelf, CD19-targeted chimeric antigen receptor (CAR) natural killer (NK) cell product candidate, at the 62nd Annual Society of Hematology Annual Meeting and Exposition and the street loved it. NK cells are the body’s first line of defense against viral infections and cancerous cells with an innate ability to rapidly seek and destroy transformed cells. NK cell therapy has the potential to 1) target multiple pathogenic antigens with measurably more efficient cytotoxicity, 2) be better controlled to reduce risk of cytokine storms and 3) be produced from a variety of sources without relying on patient-specific immune cells. Dr. Wayne Chu, Senior Vice President, Clinical Development of Fate Therapeutics stated, “The safety, pharmacokinetics and clinical activity observed following both the first and second single-dose treatment cycles of FT596 are compelling, especially when considering that the administered cell dose was significantly lower than the recommended cell dose of FDA-approved autologous CD19-targeted CAR T-cell therapies and that the heavily pre-treated patient was refractory to last prior therapy. We are excited the CAR component of FT596 has shown clinical activity at this low dose level, and we continue to enroll patients in dose escalation with FT596 as a monotherapy and in combination with rituximab. Our recent Phase 1 clinical data with FT516 in combination with rituximab, which demonstrate the potential of our novel hnCD16 Fc receptor to potentiate ADCC and drive complete responses, support our belief that the multi-antigen targeting functionality of FT596 may offer best-in-class potential for patients with B-cell malignancies.” 
    • We have made another investment in a private company called Cytovia Therapeutics that owns its own NK cell platform that some investors are calling “FATE 2.0”. They are seeking to go next year in Q2/Q3 as there is room in the markets for another NK cell company. Their website is www.cytoviatx.com.
  • Shares of Atossa Therapeutics, Inc. (Nasdaq: ATOS) closed at $.959/share up from $.95/share last week after raising an additional $25.2M this week. When you add that to the two raises that they completed in December 2020 (totaling $37M gross proceeds) that means they have raised $62.2M in gross proceeds between three equity raises affording the company a significant development runway and many more options to be considering.
    • Atossa Therapeutics is a clinical-stage biopharmaceutical company seeking to discover and develop innovative medicines in areas of significant unmet medical need with a current focus on breast cancer and COVID-19.

    • Atossa recently announced blinded preliminary results from its Phase 1 clinical study using Atossa’s proprietary drug candidate AT-301 administered by nasal spray. AT-301 was found to be safe and well tolerated in this study at two different dose levels in both single and multiple dose forms over 14 days. AT-301 is being developed for at home use for patients recently diagnosed with COVID-19. There are currently no FDA-approved therapies to treat COVID-19 at home. Learn more now.
  • Shares of INVO Bioscience (NASDAQ: INVO) closed at $3.05/share up from the $3.01/share close last week. INVO’s Management Issued a letter to shareholders this week that spoke to their key developments and future initiatives that have positioned their product INVOcell® within the severely underserved fertility market. PLEASE READ IT HERE.
    • INVO Bioscience, Inc. (INVO) is a medical device company focused on creating alternative treatments for patients diagnosed with infertility and developers of INVOcell®, the world’s only in vivo Intravaginal Culture System. 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. Since January 2019, INVO Bioscience has signed commercialization agreements in the United States, India, as well as parts of Africa and Eurasia and Mexico for the INVOcell device.
    • INVO received BUY Ratings from both Roth Capital ($5 PT) & Collier International Securities ( $5.75 PT) in December, 2020.  
  •  
  • Shares of NeuBase Therapeutics (NBSE) closed trading at $7.66/share up from the $6.99 close last week. The company expects to successfully negotiate a corporate licensing deal of some kind prior to the one-year anniversary of their April, 2020 equity financing as stated in a recent interview.
    • NeuBase is developing the next generation of gene silencing therapies with its flexible, highly specific synthetic antisense oligonucleotides. The proprietary NeuBase peptide-nucleic acid (PNA) antisense oligonucleotide (PATrOL™) platform allows for the rapid development of targeted drugs, increasing the treatment opportunities for the hundreds of millions of people affected by rare genetic diseases, including those that can only be treated through accessing of secondary RNA structures. Using PATrOL technology, NeuBase aims to first tackle rare, genetic neurological disorders.
    • Recently, NeuBase announced positive in vitro and in vivo preclinical data for its PATrOL™-enabled anti-gene therapies for the treatment of myotonic dystrophy type 1 (DM1). These new data show that PATrOL-enabled Compound A can rapidly resolve mis-splicing without negatively impacting DMPK protein levels. They also support the potential of NeuBase’s anti-gene approach to comprehensively treat the underlying cause of DM1. Curt Bradshaw, Ph.D., Chief Scientific Officer of NeuBase stated “Despite the fact that the genetic basis of DM1 is well understood today, there is still an urgent need to find the first genetically-targeted, disease-modifying treatment option for affected patients. DM1 is caused by a genetic mutation in the DMPK gene leading to mis-splicing of a broad spectrum of genes and DMPK protein insufficiency. A treatment option that addresses mis-splicing while retaining functional DMPK protein levels may be key to treating all aspects of DM1.”

    • Recently, I hosted a FREE Presentation & Q&A Event for our sister organization Tribe Public with the CEO & Founder of NeuBase Therapeutics (NASDAQ: NBSE) ($7.80/share), Dietrich Stephan, Ph.D., an industry veteran who is considered one of the fathers of the field of precision medicine. The presentation is titled “Accelerating the Genetic Revolution with a New Class of Synthetic Medicines.” You can view the recording at the Tribe Public Channel. 

  • We continue to like clean hydrogen solution provider Plug Power (PLUG) which had an amazing week closed at $53.78/share up from $33.91/share last Friday after hitting a new all-time high of $55.98 this week. It has been a nice ride this fall from the $10.50 rage when we identified it and with the a bolstered balance sheet and the Biden push for clean energy alternatives it seems to be poised for further growth.
    • This week, Plug and the SK Group also announced that the companies intend to form a strategic partnership to accelerate hydrogen as an alternative energy source in Asian markets. SK Group will make a $1.5 billion (9.9% stake) strategic investment in Plug Power.
    • Recently, PLUG announced that is expanding is relationship with Walmart (WMT).
    • In Q4/2020. PLUG confirmed that they had sold 38M shares priced at $22.25/shares raising a whopping $845.5M which represented about 9.1% of the shares outstanding which brought their capital to the $1.7B range then and now it would seem that they are close to ~3B. 

QUOTE OF WEEK

“Behind every stock is a company. Find out what it’s doing.” — Peter Lynch


Thanks again for your attention this week. Please continue to share your thoughts, questions, & ideas as we move forward. 

In the meantime, please enjoy the balance of the weekly newsletter’s videos, quotes, updates. 

Markets

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Big Movers

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Bond Markets & US Dollar

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Agriculture & Energy

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Biotech & Healthcare

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Consumer Goods & Trends

Shares of Coca-Cola (KO) closed at $54.84/share up a doll and change from last Friday’s close of $53.44/share. Shares of Disney (DIS) closed at $181.18/share edging higher from last Friday’s at $173.73/share. Shares of Nike (NKE) closed at $141.47/share slightly down from last Friday’s close at $141.60/share. Walmart (WMT) closed at $144.15/share slightly up from last Friday’s close of $143/50/share.

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Financials & Fintech

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Materials & Natural Resources

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Technology & Beyond

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Investing & Inspiration

“Behind every stock is a company. Find out what it’s doing.” — Peter Lynch

“Wise spending is part of wise investing. And it’s never too late to start.” –Rhonda Katz

“If there is one common theme to the vast range of the world’s financial crises, it is that excessive debt accumulation, whether by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom.” — Carmen Reinhart

“It amazes me how people are often more willing to act based on little or no data than to use data that is a challenge to assemble.” ― Robert Shiller

“A bull market is like sex. It feels best just before it ends.” — Barton Biggs

“The investor’s chief problem — even his worst enemy — is likely to be himself.” — Benjamin Graham

“No profession requires more hard work, intelligence, patience, and mental discipline than successful speculation.” – Robert Rhea

“The most contrarian thing of all is not to oppose the crowd but to think for yourself.” — Peter Thiel

“Money is like a sixth sense – and you can’t make use of the other five without it.” – William Somerset Maugham

“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” — Albert Einstein

“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett

“Thousands of experts study overbought indicators, head-and-shoulder patterns, put-call ratios, the Fed’s policy on money supply…and they can’t predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack.” – Peter Lynch

“Investing puts money to work. The only reason to save money is to invest it.” – Grant Cardone

“Formal education will make you a living; self-education will make you a fortune.” – Jim Rohn

“You cannot save time for your future use however you can invest time for your future.” – John F. Heerdink, Jr. 

“We always live in an uncertain world. What is certain is that the United States will go forward over time.” – Warren Buffett

“Never test the depth of the river with both of your feet.” – Warren Buffet

“Know what you own, and know why you own it.” – Peter Lynch

“Liquidity is only there when you don’t need it.” -Old Proverb

“There is no such thing as no risk. There’s only this choice of what to risk, and when to risk it.” – Nick Murray

“If you want to be a millionaire, start with a billion dollars and launch a new airline.” – Richard Branson

Fear incites human action far more urgently than does the impressive weight of historical evidence.” – Jeremy Siegel

“In investing, what is comfortable is rarely profitable.” – Robert Arnott

“Spend each day trying to be a little wiser than you were when you woke up.” – Charlie Munger

“The entrance strategy is actually more important than the exit strategy.” – Edward Lampert

“The rivers don’t drink their own water; Trees don’t eat their own fruits. The sun does not shine for itself, And flowers do not spread their fragrance For themselves. Living for others is a rule of nature” – PopeFrancis

“It is impossible to produce superior performance unless you do something different from the majority.” – John Templeton

“Inaction and patience are almost always the wisest options for investors in the stock market.” – Guy Spier

“Remember that the stock market is a manic depressive.”  – Warren Buffett

“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, Former Ceo of Disney

“In the short run, the market is a voting machine. But in the long run, it is a weighing machine.” – Ben Graham

“In investing, what is comfortable is rarely profitable.” -Robert Arnott

“The fundamental law of investing is the uncertainty of the future.” -Peter Bernstein

“How many millionaires do you know who have become wealthy by investing in savings accounts?” -Robert G Allen

“Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself.”-Ivan Boesky

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

“I talk about macro themes a lot because they are fun to talk about, but it is the risk management that is the most important thing. The risk control is all bottom-up. I structured the business right from the get-go so that we would have lots of diversification.” -Michael Platt

“Blaming speculators as a response to financial crisis goes back at least to the Greeks. It’s almost always the wrong response.” -Larry Summers

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Videos

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