What a wild day to say the least for the stem cell stocks! There were upwards of 175% gains during the first hour of trading (MCET.OB getting the honor of having the highest percentage intraday gain). Unfortunately, things tailed off quite a bit as soon as President Obama spoke about the executive order. It's was a classic "sell the news", which left many people disappointed if they didn't take profits. The overall stock market inching further down didn't help either. However, all is not yet lost.
This sell off may just be the ammunition that "big money" sitting on the sidelines needs. No professional would dare buy a stock the day of a 40% - 100% gap up at the open. This entire day was about short seller covering and retail stock buyers and sellers like you and me. I suspect that very few institutional buys have been initiated yet. The smart ones won't get in until there's a nice balance of these stocks falling far enough to have an appealing entry while at the same time technically maintaining upward momentum. It will be at this point when you'll start seeing multiple analyst upgrades. There's already been one today (see comments).
The next couple of days should tell a lot. The hope is that we get a maintainable, steady rise, but don't be discouraged if there's a gap up again tomorrow followed by some selling. The top picks continue to be GERN, ACTC.PK, and STEM for the long term.
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3-7-09
Prior to the close of Friday's market, nothing special happened again this week for the Stem Cell stocks. A few were flat but the majority remained down. However, after weeks of seemingly getting pounded, there finally appears to be a light at the end of the tunnel. Most names in the sector exploded 3/6/09 after hours in upwards of 80% on news that President Obama will sign an executive order to allow federal funding for human embryonic stem cell research. What's amazing is that these huge moves are taking place with the larger cap stem cell stocks. The unusual spike signifies that the sector has been heavily shorted after such an impressive run up ending the beginning of February. There will be some tremendous money making opportunities to begin the week so hopefully you've been holding tight or you've recently made some timely buys. Forget about trying to figure out which stocks deal directly with human embryonic stem cells. Every company in the sector will get lumped together (see the last stem cell and infrastructure rallies for proof). Let's take a look at some possible game plans Monday:
Game plan 1 - As far as the large cap stem cell stocks, there will probably be significant selling in Monday's pre-market and the first 30 minutes to an hour of trading. As a result, I'd be very surprised if a stock like ASTM actually opens with the 82% gain currently showing after hours. If you already have a position in the stock, you can either sell with the herd or hang tight and hope for a full day or multi-day run. If the market as a whole is in rally mode, it may be worth holding on. However, be careful because the market could be similar to last Friday's with a first hour suckers rally to start the session. If you decide to chase (although I wouldn't recommend it with the larger caps) I'd stick with GERN, STEM, ASTM, CYTX, and KOOL. Look to start a position after a probable MM shakeout around 10AM.
Game plan 2 - If the gains with the large cap stocks are as significant as the after hours forecast, the small caps should really explode. If you are looking to buy into the sector early Monday, the small caps may be the safest bet. Penny stock chasers will pump the likes of CBAI.OB, MCET.OB, ACTC.PK, etc. like there is no tomorrow. The sentiment of every penny stock forum and message board I've seen this weekend has been to "load the boat" with stem cell stocks. All of these stocks should do well and I'd load up first thing in the morning. Typically, it's better to buy penny stocks at 9:30AM because the gap ups are not as extreme due to the fact that there is very little pre-market activity to significantly drive up the price. I would particularly be on the lookout for stem cell stock low floaters MCET.OB, LSTM.OB (despite the reservations people have if it is really still a stem cell company) and PSTI purely based on recent history. The super run MCET.OB had a little over a month ago is still fresh in the minds of many. I'd expect expect close to a repeat performance.
Game plan 3 - Don't forget 2nd and 3rd day singular stock moves. If you see a particular stock is being left out in Monday's run for no reason, it might be a good idea to initiate a position. It's hard for every stock in a sector to go up significantly on the same day. There are simply too many "pile jumpers" in the stock trading world. PSTI was one the last big moving stocks after GERN's big announcement so keep your eyes open.
Game plan 4 - If you are into the buy and hold theory and want to invest long term, stick with the best of breed names like GERN and STEM. If you want the safest investment with the biggest potential to hit the jackpot, own ACTC.PK.
Top Stem Cell Stock Performer(s) for Last Week:
- Stem Cell Innovations (SCLL.PK) = Up 20% for the week; There has been no news. So, based on the solid volume, it looks like the sellers have just dried up and there is slow steady accumulation.
Worst Stem Cell Stock Performer(s) for Last Week:
- Geron Corp (GERN) = Down -14% for the week; It's obviously being shorted to no end. Shortsqueeze.com says that 22% of the float is being shorted. It's still a good company, but it's being dragged down with the rest of the market. However, the short squeeze will be explosive!
Stem Cell Stocks Current Price and % Up or Down Since the First Rally on 1/23/09
Market Cap Over 50 Million
Ariad Pharmaceuticals (ARIA) = Current Price: $1.20; Down -17%
Aastrom Biosciences (ASTM) = Current Price: $0.33; Down -36%
BioTime, Inc. (BTIM) = Current Price: $1.70; Down -19%
Celgene Corp (CELG) = Current Price: $41.16; Down -16%
Cytori Therapeutics (CYTX) = Current Price: $2.31; Down -28%
Geron Corp (GERN) = Current Price: $3.87; Down -26%
ThermoGenesis (KOOL) = Current Price: $0.40; Down -26%
Osiris Therapeutics (OSIR) = Current Price: $18.01; Down -4%
StemCell Inc. (STEM) = Current Price: $1.38; Down -36%
Market Cap Under 50 Million
Advanced Cell Technology (ACTC.PK) = Current Price: $0.11; Down -8%
Athersys Inc. (ATHX) = Current Price: $0.58; Down -15%
Brainstorm Cell Therapeutics (BCLI.OB) = Current Price: $0.10; Down -5%
Bioheart Inc. (BHRT) = Current Price: Current Price: $1.00; Up 27%
Cord Blood America Inc. (CBAI.OB) = Current Price: $0.0089; Up 134%
Cyro-Cell Intl (CCEL.OB) = Current Price: $0.54; Up 17%
Neuralstem (CUR) = Current Price: $0.86; Down -40%
International Stem Cell (ISCO.OB) = CurrentPrice: $0.45; Up 55%
LifeStem International (LSTM.OB) = Current Price: $0.01; Up 156%
MultiCell Technologies (MCET.OB) = Current Price: $0.0099; Up 130%
Pluristem Therapeutics (PSTI) = Current Price: $1.08; Up 70%
Stem Cell Therapy Intl (SCII.OB) = Current Price: $0.06; Up 20%
Stem Cell Innovations (SCLL.PK) = Current Price: $0.009; Up 64%
Possible Catalyst for the Week:
- It was announce just before the close of the market on Friday that President Obama will sign an executive order on Monday rolling back restrictions on federal funding of human embryonic stem cells research. GERN is up 40% and STEM is up 67% during Friday's after hours. This is a dead giveaway for a major short squeeze.
-5th Annual Stem Cell Research & Therapeutic Conference - runs March 9-10, 2009; http://www.gtcbio.com/conferenceDetails.aspx?id=145 ; A different stem cell conference last month got a lot of coverage from news and television outlets and the stocks in the sector responded strongly.
- Most people are expecting a bear market rally this coming week. We are very close to a key technical support level in the S&P. Also, there will be a lot of positive speculation leading up to a hearing on 3/12/09 regarding "Mark to Market" Accounting, which could help the financial sector. I'd suspect that many of the beaten down sectors particularly with strong fundamentals like the stem cells stocks will get a significant boost.
- Look for a series of analyst upgrades. They are always late to the party and are just looking to boost the value of their own investments. It could help the stem cell stocks though.
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cardl,
ReplyDeleteHere's one of the first of those analyst's reports:
Barrons Online:
"The stem-cell researcher saw shares climb 17% after President Obama ended limits on funding for embryonic stem-cell research set by the previous administration in 2001. Merriman Curhan Ford analyst Joe Pantginis noted that Geron is the "industry leader." Pantginis added, "Geron's stock price is significantly off its recent highs and we believe it now represents an attractive entry point as the company moves its stem-cell programs forward as well as focusing on the broad telomerase oncology program in 2009." Pantginis reiterated a Buy rating on Geron.
You're absolutely right dhippe. That's the first of many!
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