Stocks traded relatively sideways during the opening day of the new trading week as investors continued a holding pattern while fiscal cliff negotiations progress behind closed doors in Washington. Some took it as an encouraging sign that US President Barack Obama and House Speaker John Boehner were sitting at the same table, but most are taking an "I'll believe it when I see approach" to the situation and holding fast since both sides still looking to be standing fast on some key issues. What complicates matters, too, is not just the uncertainty of the negotiations, but that a political game of chess is also being played, with each side consistently trying to gain the upper hand in the court of public opinion. With that in mind, it's still a good idea to expect volatility and hold some cash on the sidelines in case things go south as we approach the cliff deadline.
Other than that there were no significant economic data released on Monday on which to dwell, so all eyes will be on the Fed meeting, starting today and heading into Wednesday.
As those stories continue to play out, here's a few stocks to keep an eye on for the day, if not for remainder of the week...
McDonald's Rebounds On November Sales Numbers
Shares of McDonald's (MCD) started to rebound on Monday from their recent lows when reports hit the wires that the company's global comparable sales were up by 2.4% for the month, while same-store sales in US were up by 2.5%. Both McDonald's and Yum Brands (YUM) were identified as potential rebound plays to watch as both dropped over the past weeks on weaker-than-expected earnings and/or weakening forecasts. MCD closed the day up by a percentage point on Monday and - being arguably the recognized leader of its sector - is always one to consider on the dips for the long term or retirement portfolio. Bear in mind that its also wise to trade the 'buy and holds' (such as MCD and YUM) in a long term portfolio at opportune trading points, too, just like we do with holdings in the more speculative portfolios. That strategy still allows one to hold for the long term, but to also secure profits when possible in order to re-invest on the dips, and can also be more profitable than 'averaging down' over the long run. Because significant percentage moves in the large caps often take quite a while to play out - at least in a normal, less volatile market - the trading is spread far apart and is preferable to the daily or even weekly trading that those with day jobs often don't have the time for. Both of these stocks could find themselves dropping again should the market head south over this fiscal cliff stuff, but the potential for an eventual rebound would still be there. MCD shares were rolling higher again in the pre-market hours on Tuesday. Worth watching.
Healthcare, Biotech, Pharmaceutical:
Dendreon Pushes Through Five
Dendreon (DNDN) shares pushed through the five dollar mark on Monday for the first time since early November when news circulated that Johnson & Johnson (JNJ) won expanded approval from the FDA for use of its prostate cancer treatment Zytiga in pre-chemotherapy conditions. DNDN's resulting bounce may have had little to do with the Zytiga news since the stock has spiked to five on multiple occassions over the past months, but volume kicked in at double the norm on Monday, indicating that the spike was likely related. Some investor optimism surrounds the potential for both Zytiga and Dendreon's Provenge to work hand-in-hand in pre-chemo indications and if that's the case, then Provenge sales may receive a boost as well. Regardless of the news driving Monday's price movement, DNDN has also made a decent late-year trade. Shares reached highs this week that were roughly forty percent higher than November's open as some are keying in on 2013 as a potential rebound year for the once ten-bagger stock. The positive speculation is based mainly on the company's recent cost-cutting measures and expanded coverage by Aetna (AET), which could lead to other insurers following suit and a boost in Provenge sales.
While the JNJ news could benefit Dendreon for the reasons listed above, the company's pipeline and a European approval should also be considered as potential growth factors later on down the road. Also consider that the company will face competition from Medivation's (MDVN) Xtandi and Sanofi's (SNY) Jevtana, too.
Until a rebound is in full effect in terms of sales numbers, DNDN will likely continue to provide investors with ample trading opportunities - and there's definitely something to be said for that.
Inovio Reports Positive Interim Data
Inovio Pharmaceuticals (INO) recently released two rounds of encouraging trial data and could be a stock to watch based on a deep pipeline that includes nine programs in development, three of which are in Phase II stages. The first round of news came in early December when the company announced positive interim results from a Phase II leukemia trial that is investigating the use of Inovio's proprietary electroporation technology in delivering a WT1 DNA vaccine into patient cells. Electroporation, as previously discussed, uses small electrical pulses to inject therapeutic treatments directly into damaged or infected cells. The electrical pulses then cause the cell wall to harden, creating a condition where the treatment becomes 'trapped' inside, which therefore makes it more effective, as little can escape. Early studies have proven the worth and potential of this technology and the leukemia trial data serves as validation.
Another update came last week in regards to Inovio's SynCon vaccine platform, which produces synthetic vaccines to treat various infectious diseases and cancer types. From this platform the company has developed an experimental universal flu vaccine that could someday replace the standard flu shot that treats only one strand at a time. The flu-based SynCon vaccines are earlier along in development, but interim results from an ongoing Phase I trial demonstrated that "a single dose of INO's H1N1 universal SynCon flu vaccine followed with a dose of a seasonal flu vaccine generated protective immune responses in 40% of trial subjects compared with a 20% response rate in elderly patients who received the seasonal flu vaccine alone." These results, which effectively double the effectiveness of the current standard-of-care, uderlie the potential of the SynCon platform.
Even with the encouraging trial results, INO shares have slipped over the past couple of weeks after having spiked back in October on similar encouraging news. Shares are worth watching for a potential rebound as INO may be testing a previous bottom at this point, but with a deep pipeline that is advancing with success, this will be a story to watch. The company's pipeline is still not in the latter stages of development, however, so volatility will be ripe along the way and dilutive financing is always a risk with these developing companies. That said, six of the nine programs in development are already funded by third parties, according to documents contained on the Inovio website, which alleviates some financing concerns moving forward and also validates INO's technology and ability to attract collaboration.
MRI Interventions (MRIC) has dipped to recently-traded lows and could be one to keep an eye on as this stock has provided numerous trading opportunities from these levels over the past few months. Volume rolled in and shares responded to news last month that the company had received the "2012 Global Company of the Year Award in Image-Guided Neural Interventions by Frost & Sullivan," but the stock continued to trickle downwards amid the broad market uncertainty. This could be opening an opportunity for investors to either average down or accumulate for the future with an eye towards the development of the company's ClearPoint and ClearTrace MRI-enhancing systems, which provide medical professionals with real-time imagery during complicated procedures on the brain and heart, respectively. As noted previously, MRIC has noted significant growth over the past few quarters and recently boosted its sales force in order to support plans of more growth into the brain surgery sector both in the United States and Europe. A trading and/or accumulation point could be developing here as investors await next quarter's report to confirm a now-established growth trend. It's also worth noting that this company has already demonstrated to build high-powered support for its technology, as partnerships with Siemens AG (SI), Boston Scientific Corporation (BSX) and Brainlab have already been secured.
Gilead Sciences (GILD) has been on a roll this year, currently trading at more than double its 52-week low, and investors were rewarded yet again on Monday as the company announced approval of a two-for-one stock split to be implemented next month. Shareholders holding shares on 7 January will be able to partake in the split, according to Monday's press release, and shares will begin trading on the 28th of the same month. Gilead has successfully continued to register growth in its robust pipeline of HIV-treating drugs and had also acquired Pharmasset earlier in the year for its pipeline product potential. Two-for-one splits are rarely a bad deal for investors, unlike reverse splits, although the company will still need to demonstrate growth for investors to really cash in.
CellDex Therapeutics (CLDX) gapped higher on Monday and trading volume remained strong for the day as the comapny announced positive Phase II survival data for breast cancer patients being treated with CDX-011. Oppenheimer reiterated its 'outperform' rating on the stock as a result and boosted its price target to $10 from $8. CLDX is another example of the quick profits that can be secured in the cancer immunotherapy market, but traders should also consider the inherent volatility of the sector and bank at least some 'trading share' profits into spikes such as this one, in my opinion. To follow up Monday's solid news release, the company also announced on Tuesday morning that its CDX-301 was well tolerated and effective enough in Phase I studies to continue product development in treating a number of indications, including hematopoietic stem cell transplant and cancer immunotherapy. In kind, shares were up another six percent in the pre-market Tuesday. Still a story worth watching.
Roundup: Tuesday looked to be a green day for the markets early-on as early headlines emphasized encouraging progress in the fiscal cliff negotiations and optimism from the Fed, but a large-scale rally is still not likely until a cliff deal is reached. Any guessing as to what happens before that is pure speculation, so take the daily-changing headlines with a grain of salt as the media just likes to create jangle when it can. Additionally, economic reports from Japan and Europe have not been the brightest of late, which is another item to consider leading into the tax-loss selling period. As has been the case for the better part of the year already, in my opinion, utlizing those trading shares while holding onto a core position is the name of the game in order to bank profits and have some cash on the sidelines to jump on any broad market dip like Eli jumped all over New Orleans this weekend.
Disclosure: Long MCD, YUM.
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