STTG Market Recap Jan 6, 2015 – Stock Trading To Go
Watch tonight’s video market recap on my Ticker.tv channel, Mark333.
Indexes continued their rotten start to 2015 as the S&P 500 fell 0.89% and the NASDAQ 1.29%. Markets opened up and then sellers came in which is not the type of action you want to see during a bull market move – you want the opposite (morning weakness bought!). Oil continues to weigh on the market. Tuesday’s economic reports had the Institute for Supply Management’s non-manufacturing index declining to 56.2 last month from 59.3 in November. Any reading over 50 still indicates fashion. Separate data had factory orders down in November.
Both the S&P 500 and NASDAQ fell to their 100 day moving averages today. I created a new blue dotted line on the S&P 500 chart connecting the lows of October and December 2014 – that was breached today; we’ll see how much that line matters in the coming days but be aware of it for now. So at this point the market environment is not a positive and caution is in order.
The NYSE McClellan Oscillator obviously remains in the red but is not yet in the extreme oversold condition yet.
Oil continues to be in free fall. We said Friday it broke to new closing lows and that was not a positive, and we’ve seen two very bad days follow.
Ten year Treasury yields closed sub 2% for the first time in a long time – this usually happens as the bond market anticipates a slowing economy OR just as a rush to safety. But this is nasty action.
The volatility index spiked today – it not yet at the highs of either mid December or mid October but getting there.
There were some winners today, especially in the biotech space. NPS Pharma (NPSP) is a name we discussed quite a bit about a year ago – it then fell in a long slump so no reason to look a it. But you can see it’s emerging from a half year range in yellow. Now keep in mind if the market continues to be weak these stocks can fall dramatically in one day but if you are looking for long ideas that are still hanging in there this is one.
Kite Pharma (KITE) is a name that has had a tremendous run and the past 2 days has really exploded on a deal with Amgen. It is EXTREMELY overbought but a name worth noting for your watch lists.
Credit Suisse raised its price target on Kite Pharma, a day after the cancer treatment developer announced a significant deal with Amgen. Jason Kantor maintained an outperform rating on Kite and raised his price target to 79 from 71. On Tuesday, Kite announced the European Commission “has designated KTE-C19 as an orphan medicinal product for the treatment of diffuse large B cell lymphoma.” The orphan drug designation provides regulatory and financial incentives for companies to develop and market therapies that treat a life-threatening or chronically debilitating condition where no satisfactory treatment is available. Amgen and Kite announced plans to develop the next generation of Kite’s chimeric antigen receptor T-cell therapies for cancer. Amgen is paying $60 million upfront and up to $525 million in milestone payments. “The Amgen deal is a significant positive for Kite,” Kantor wrote in his report. “Amgen is an ideal partner because of its extensive work in the field of targeted T-cell therapies.” The deal validates Kite’s intellectual property and capabilities, Kantor said.
Nordic Tankers (NAT) is a name we spent quite a bit of time on, in our Sunday evening video idea session. This is a company that transports oil around the world and it looks like 5 year rates for the ships are significantly above mid 2013 levels which obviously helps the profit line for this type of company.
Five-year VLCC (very large crude carrier) prices in November 2014 increased to $77.1 million from $76.8 million in October 2014. This is the highest level since August 2011 and much higher than the post-boom trough of $55 million in mid-2013.
Twitter (TWTR) also had a good day as Yahoo’s former CEO suggested Twitter should buy it. Of course I am sure he owns many millions of shares of Yahoo himself so he is not biased!
Michael Kors (KORS) was a once high flying apparel company but has been weak the past half year and today suffered serious losses as analysts worry about the discounting it is doing to move merchandise. “A combination of rising inventories and softening traffic has led to a dramatic step up in promotional activity across Michael Kors stores, e-commerce sites and premium wholesale distribution partners,” he said in a note to clients.
Bill Gross is not positive on risk assets in 2015.
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STTG Market Recap Jan 6, 2015 – Stock Trading To Go
