Over the upcoming weekend, the annual meeting of the American Society of Clinical Oncology (ASCO) will occur. They always hold their convention the weekend after Memorial Day Weekend. There will be exciting things like dense abstracts, long drawn-out presentations, and symposiums regarding heady discussed. Kind of an awesome way to spend a weekend, huh? Still, once one gets past the very complex nature of all of the work, it is actually a fascinating conference. Getting serious very fast as we’ve all either directly or indirectly faced cancer or know someone who has, ASCO’s purpose is quite important. Simply put, ASCO is the foremost organization in the world representing physicians of a variety of oncology specialties whose primary goal is to care for people afflicted with cancer. The members of the organization are committed to advancing cancer education for physicians and patients, promoting communication about cancer, and perhaps most notably attempting to improving care of and prevention of cancer. ASCO members meet annually as noted with upwards of 30,000 people attending the conference. Clinical trial results and updates of cancer studies are presented each year in noting the year’s progress against the fight against cancer. As day traders, we have a much less noble purpose: earn a living from trading stocks of companies making presentations. There tends to be an enormous news flow out from the conference. Obviously, some years are better than others for trading purposes depending upon the degree and breadth of studies done at the conference. But oftentimes, leading up to, during, and a couple of days beyond the conference, there are some major moves in many biotech stocks. Many recent big movers have been in the biotech sector with stocks like Dendreon (DNDN) having made significant moves in 2010. Indeed tiny microcap stocks to titans like Amgen (AMGN) often move in double digit percentages particularly just after ASCO. Over the weekend, hundreds of companies will present their year’s work; headlines will be pouring out all weekend about the findings. By Monday morning, there will be a flood of news. Again, some years are better than others for trading these things, but extra homework has got to be done by the prepared day trader. I cannot emphasize enough- I’ve observed in the many years I’ve been day trading that most traders who do not do homework and try to trade this incredible opportunity tend to lose a tremendous amount of money. They just cannot understand why a stock could be up 300% or down 20% despite posting ‘positive’ results. See, a major finding can put a company in the limelight because if the market capitalization is, say, $15 million but they may possibly have a $500 million drug on their hands, why shouldn’t the stock triple “just in case” the unknown product does play a factor? Conversely, if a company has a ‘successful’ phase III FDA trial, the stock may still fall if, say, the drug passed safety tests but failed to pass statistical significance results (which will be discussed in every phase II release). As a side note, phase I clinical trials involve a small sample size of humans, phase II on a large set of humans once safety tests were proven on the tiny phase I set, and phase III over a huge sample size with reams of data comparisons made to placebos and efficacy of similar products. Anyway, over the weekend into Monday morning, check sources like Yahoo Finance, Google…heck even mainstream news sources like CNN will report some results. The bottom line is to make sure you read every headline (if not story) possible regarding this oftentimes incredible trading phenomenon if you wish to trade it. As noted, it is seemingly random as to which years these stocks vacillate wildly, but moves like what occurred in Intermune (ITMN) early last month are entirely possible and indicative of what may happen come Monday morning in select stocks. So please be prepared as knowledge is key here (as it so often is) in terms of knowing what came out of the conference and how to interpret the newsflow.
Markets in Asia treaded water overnight ahead of any potential news coming out of Europe as well as the U.S. jobs report with both Tokyo and Hong Kong closing almost exactly where they started. The story changed in Europe though with rumors of a large derivative loss at big European bank SocGen and negative comments out of Hungary over its debt situation. Furthermore, the jobs report came out weaker than expected. This is all leading to a near complete reversal of the gains of the last couple of days with European bourses now down 2% on average. Oil is down 2%, gold is slightly weaker, and the euro is now edging towards the 1.20 level. Futures are getting demolished with the Dow indicated down about 200 as of this writing. For the day, the main number from here is the euro with the rumor of the moment dominating the landscape. Look for the markets to open deeply negative and then not really stray too far from opening levels news as there will be no reason to do much of anything pending any major news along with traders getting a jump on what will be a hot and humid weekend in many parts of the country.
Reiterating-
If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.
If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-
Good- The following stocks have good news and/or a strong technical pattern
TRBN- the Board of Appeal for the European Patent Office upheld the Opposition Division's original decision to revoke Genentech and Biogen Idec's European Patent (BIIB)
COO- decent earnings
JRJC- good earnings
MATK- good earnings
CMTL- good earnings
RIG, BP- closed near a high
NBL, APC- closed near a high
SWN, DVN, RRC, CHK- closed near a high
WLP- closed near a high
ZQK- decent earnings
RCMT- received (and rejected) a 5.20 takeover bid from CDI
WPRT- featured on “Mad Money” last night
Bad-The following stocks have bad news and/or a weak technical pattern
PNC- closed near a low
BK- share offering
ULTA- decent earnings, but doing a share offering
X- cut at Goldman Sachs
Earnings:
None today
Good luck today.
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
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