With the pending Federal Reserve rate hike due in mid March, the question now seems to be how many rate hikes and how fast? While the popular consensus seems to be 1.5 percent by the end of the year, only time will tell how the markets are going to react to higher rates. Remember the last time Fed raised the rates by 0.25 and markets didn't take it very well? It's a carefully orchestrated song and dance between Janet and the markets.
In addition to that, the smart money has a bullish outlook on the markets right now. Take for example, David Tepper, billionaire hedge fund manager's recent comment,
"I don't think the market's cheap, but you can't be short in that kind of environment."
The environment seems very ideal for a rate hike now with better than usual economic numbers along with the policy promises of the new administration to reduce taxes, spend on infrastructure and loosen up regulations.
Trade Recap from last week (03/06/2017)
Let's look at some of the ideas we talked about in last week's blog post which we thought were good candidates to bet against.
NTNX – Nutanix, Inc. : We anticipated that this stock could bounce up to $24 or $25 and that would be a good short entry. NTNX went as high as $23.87 on Monday and traded as low as $21 in the past couple of days dropping almost $2.50 since we made the call. We expect this to continue to make it's way to the high teens.
BOX – Box, Inc. : We said Box would be a good short candidate if $17 support couldn't hold. Stock now trades at mid $16 and we expect this to go to $15 if the steady sell off continues.
BKE – The Buckle, Inc. : We said BKE is very likely to trade in the mid teens in couple of weeks. Right now it's trading at $17.30 and is on the right path.
PBYI – Puma Biotechnology Inc : We were expecting $35.50 to act as a strong resistance and price to continue downward in order to look for an entry but that didn't happen. Bulls then took control of the stock after two trading sessions and ran it up to $40.
I opened positions in NTNX and Box this week.
5 BioTech Ideas to go long
As biotech sector heats up with IBB testing $300 couple of times this month due to the boost from favorable regulation promise, I've used our prospecting engine in combination of our proprietary gauges to identify these ideas as shown below in the screenshot.
To Learn more about how to use and take advantage of our proprietary gauges; i.e. - Berserker, Elasticity, Flux, and Social... watch the instructional videos we created on our howitworks page.
Don't miss our daily action list videos where you can follow along with us as we're building (in real-time) our trading lists for the next market day.
Now back to the results in our scenario...
AUPH – Aurinia Pharmaceuticals Inc
With it's lead drug entering into phase 3 trial and company still has cash of $39.6 million and working capital of $33.5 million AUPH has enough runway and is not cash strapped to pursue their objective.
We will be on the look out for any pull back for an entry with a target of $9 or $10. $6 seems very critical as a strong support if it even gets there to test it.
TGTX – TG Therapeutics, Inc.
After a positive results of it's phase 3 trial drug TGTX closed above $10 on March 6th 2017. Despite the public offering of 50 million shares, investors and traders alike showed confidence in the stock by pushing the stock higher.
We will be looking for an entry to ride this up to $14 or $15 in a week or so if it can clear out $12 in the next few trading sessions.
LJPC – La Jolla Pharmaceutical Company
With a positive phase 3 trial result shares are making new high for La Jolla Pharmaceutical. After the initial pop and a healthy pull back, price seems to be respecting 8 exponential moving average (EMA) as $31.50 seems to hold well.
We're expecting LJPC to take out $36 and in the next few days if momentum continues and break $40.
And here are two others from this scenario you can analyze in our platform. We encourage you to research each actionable idea further to understand the catalyst, story, and/or event behind each one:
- CNCE – Concert Pharmaceuticals, Inc.
- BCRX – BioCryst Pharmaceuticals, Inc.
Alright, That's it for now folks. Happy and Profitable trading for the rest of the week!
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