Will The Bulls ‘March On?’; Oil Closes Up In Feb.; Gold Loses Luster In Feb – Time To Buy? ACAD, CLDX, CAPN,ZIOP
“February was nothing short of spectacular,” said Art Hogan, Chief Market Strategist at Wunderlich Securities. The NASDAQ’s 7 percent gain (in February), “the NASDAQ was really phenomenal, in and of itself,” he said. As Evelyn Cheng wrote on CNBC’s website this weekend that, “stocks performed much better during the second month of the year than in January. Both the S and P 500, and the DOW hit new records for the first time in 2015 in February; and, the major indices are up about 2 percent,” year-to-date.
For the week last week, the DOW lost 7pts., or basically flat, to close at 18,132; while the S and P 500 closed lower by 6pts., or -0.3 percent, to close at 2,104; and, the NASDAQ gained 8pts., or +0.2 percent, to close at 4,963. For the year, the DOW is +1.74 percent, while the S and P is +2.21 percent; and, the NASDAQ is the leader of the pack, at +4.8 percent.
“As March begins, investors will have lots of data to parse, especially the February unemployment report Friday,” (March 6, 2015) said Chris Gaffney, President of EverBank World Markets. “After Federal Reserve Chair Janet Yellen spoke to Congress last week, the market appears to be moving its expectation of the first rate hike to later in the summer, [rather] from the beginning,” wrote Vito Ricanelli in this weekend’s Barron’s.
“Stocks outside the U.S. were ebullient, and “pretty much every other market is beating the U.S.” notes Michael Shaoul, Chairman of Marketfield Asset Management. The MSCI World Index, excluding the U.S., rose almost 1 percent last week.Year-to-date, that index has doubled the S and P 500’s rise, even in dollar terms,” Mr. Ricanelli wrote. “That;s a bit of surprise,” Shaoul adds, “considering the consensus coming into 2015 saw the U.S stock market as the place to be,” or TINA (There Is No Other Alternative) as it is known on the street, “But, while the U.S. is roughly meeting economic expectations, the bar is lower in the rest of the world — whether its Japan, Europe, or emerging markets, That allows expectations to be beat, even though risks are higher overseas,” Mr. Ricanelli wrote.
Shaoul’s favorite investment area is Japan. Though Japanese economic data are mediocre, its companies are in good shape,” he said. “While rates will be going up stateside, they are going to go down elsewhere.”
“With fourth-quarter earnings season over, the focus will turn back to macroeconomic data; and, a number of non-U.S. Central Bank meetings this week,” said John Canally, an Investment Strategist at LPL Financial. European Central Bank policy makers assemble March 5 (Thursday). In light of the Greek situation and Russia/Ukraine, that should be an interesting meeting. “Further ahead,” Canally said that, “although market professionals recognize that the S and P 500’s first quarter earnings will be negative, thanks to deep declines in energy, “it’s still not widely known among average investors.”
“Soon, it will be. That could be the occasion for renewed volatility,” this month, Mr. Ricanelli forecasts.
What Happens Historically For U.S. Stocks In The Month Of March?
Looking back over the past 20yrs,, all three major indices have notched gains the majority of the time, On average, the S and P 500 has gained 1.7 percent in 14 out of the last 20yrs,, or 70 percent of the time; while the DOW has risen 1.5 percent in 15 of the last 20yrs., or 75 percent of the time; and, the NASDAQ averaged a gain of 0.8 percent in 11 of the past 20yrs., or 55 percent of the time. The best sector plays in the month of March the past twenty years has been Industrials, which have averaged a 2.4 percent gain in March 81 percent of the time; while Utilities averaged a 1.9 percent gain over the last 20 March’s 75 percent of the time,
Crude Has First Monthly Gain Since June Of 2014
West Texas Crude ended the month of February up 3.3 percent, closing at $49.76, it’s first monthly gain since June of 2014 — snapping a seven-month losing streak. Meanwhile, Brent Crude closed up $3.90, to $62.40 per barrel; a 16 percent gain for February. Both represent the best gains in oil since 2009.
“it’s true that global demand for oil has seen signs of life, and outperformed what most economic models would suggest; but, a large part of that strength is linked to very low prices in January,” said Richard Mallinson, Geopolitical Analyst at Energy Analyst in London. “The risk is that some of the strength will fade if prices recover. I think we will have a better year for demand growth than last year; but, it’s not yet looking like the kind of robust underlying demand growth that could drive a sustainable rise in prices,” he added. “In short,” Mallinson said, “a risk of further, sharp falls remained, and that Brent Crude could re-visit the $40 range.”
Gold Loses 5 Percent For Month Of February; But, Rebounds Late Friday
Gold had its biggest monthly loss since September 2014, losing 5.3 percent in the month of February; and, the yellow metal is now down 7 percent year-to-date. Some noted analysts say it is time to start nibbling at the gold miners, and/or, a gold ETF, such as the GDX; but, Societe Generale analyst Robin Bahr said, “any [economic] data coming in weak, plays into the view that [interest] rates stay lower, longer, and vice versa.” Lower rates are bearish for gold; while, rising rates is bullish. “Generally, we’re stuck in a $1,200/$1,220 range…and, the market will continue to look at U.S. economic releases for clues over future trading sessions.” My own view is the Fed is likely to change its language this month, to a more hawkish tone; and, I may just start initiating a position in a gold ETF like GDX; or, in the gold miners such as Neumont (NEW) mining,
ACAD, CLDX, CAPN, ZIOP,
Acadia BioPharma (ACAD) had another stellar week, and continues to melt up, as investors continue to believe the company will receive FDA approval for their Pimavanserin drug — sometime this year — for the treatment of Parkisnon’s psychosis. I added to my current position in the scock/company last week. Shares close Friday, up 19 cents, or .5 percent, to $37.97. After the close Friday, shares were up another 13 cents. Last week, Cowen and Company raised their target price on ACAD shares from $43 to $49; while, JP Morgan has a $50 price target. I am bullish on ACAD; but, there are no guarantees in this business, so….do your own due diligence and homework, and understand your risk tolerance.
CellDex Pharmaceuticals (CLDX), also continued its melt-up, with shares closing Friday, up 60 cents, ot +2.41 percent, to $25.54 cents. Last Monday, the company’s drug, Rintega received Breakthrough Therapy Designation from the FDA, for the treatment (targets tumor cells) of EGFRIII-positive glioblastoma. I also added shares to my existing position in CLDX last week; but, just like ACAD, there are no guarantees in this business. Make sure you do your own due diligence and homework; and, understand your risk tolerance.
Two other companies I bought shares in…both speculative… were Capnia Inc. (CAPN) which has been extremely volatile — so it takes a strong stomach, and ZioPharm Oncology Inc. (ZIOP). Of the two, ZIOP had the best week, closing Friday, ZioPharm shares have been steadily rising for the past six weeks, after announcing a licensing agreement with the University of Texas MD Anderson Cancer Center for use of its genetic technology. ZIOP may be a keeper, jury is still out on CAPN. Will watch closely; and, decide wiether or not to hang with it a little longer, or move on. That’s all. Have a good week. V/R, RCP