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Basically, the resistance that was evident back in late May early April acted as support last week for the SPX. We’ll see if it can hold this week. I posted some thoughts for you guys yesterday. In case you missed it, here it is.
The dynamic has changed for now, so obviously we have to change with the market. Things to look for now are higher treasury rates (TNX & TYX) and a higher dollar (UUP). The media is back at it again, and they will scare the hell out of you, so my advice, as always, is to turn them off. The media will have you think that the 10 year note will be 5% by Friday. Not true, and as a matter of fact, a pullback in yield soon wouldn’t surprise me, as a yield from 1.62% in early May, to 2.51% on Friday is already a monstrous move.
Other things to watch are commodities, but especially crude. Crude is starting to correct, but not as much as I think it can. Remember that crude is still priced in U.S Dollars, and if the dollar goes higher over time, you should see a move down in oil that no one is prepared for. Lower oil prices are a tax for cut for the economy which is bullish, but bad for the commodity itself. I am looking to get long SCO for a much longer term swing soon. This can be all early stage changes, so a lot of money can be made.
One name tonight.
CYTK- This one a little different because this is a buy and put away stock for me. I owned this one earlier in the year at 1.15 and sold it around 1.30. Genius. There was big news on this stock Tuesday as the company announced that results from ATOMIC-AHF have been accepted for presentation during a Hot Line Late Breaking Trials Session at the European Society of Cardiology (ESC) Congress 2013. the stock traded from 1.40 to a close of 2.16 on Friday.
This is a heart drug that has $10 billion potential. A $ 1 billion drug is considered a blockbuster. By giving the drug trial late breaker status, a panel of top cardiologists in Europe basically gave a huge stamp of approval for Ome. It is very unusual to grant late breaker to a P2 study. Usually in large P3 studies. (Based on my limited biotech and FDA knowledge, even though I have been trading these suckers for over 20 years)
This is a very early stage drug and anything can happen, but it is already showing up on many momentum and large volume breakout scans. Analysts don’t cover it, mostly because they cant as it is under 5 bucks a share. Hedge funds have increased ownership recently, and the volume last week was blow out. Hedge funds are in though.
Some of these small biotechs can get a life of their own (all are very speculative). I remember that PCYC was $2 not too long ago and it tagged 95 this year. I am in no way implying the same will happen here.
AMGN is CYTK’s partner on this, and via a recent straight equity deal with CYTK, just became their third largest shareholder. Results will be presented jointly by AMGN and CYTK together in late August, early September, so there could be some fireworks between now and then.
So how do yo play this one?
This is the kind of stock which could just keep going as momo players are now in the name. However, because momentum guys are in it, that could also give an opportunity to enter when they get bored and sell. They always do. Whatever you do, I would chase the open tomorrow, I would rather see you buy it on a pullback to the 1.70-1.90 range.
CYTK Daily
CYTK Weekly
There are still some great setups with good relative strength that are acting well throughout this sell off. EVC and SREV come to mind. I think technology gets some play going forward, and I’m looking seriously at AMD and others. I will keep you posted as things develop.
See you all in the morning.
Joe