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The past week saw the S&P 500 rise by just over one percent, and close the week at 2,549, Biotech’s and Technology names continue to run hot, and the FAANG’s are starting to run again too, while Tesla and Acadia came back strong by week’s end.Â
Tesla and Acadia Pharmaceuticals had a busy week, both coming under pressures from the short sellers. But stock managed to finish the week higher.
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Biotech and Tech
Biotechs surged this week past week with the NASDAQ Biotech ETF ($IBB) finishing the week up over 2 percent, while the Technology Select Sector SPDR ETF ($XLK) was up by 1.5 percent. For the year the IBB is now up over 28 percent, while the XLK is up by almost 24 percent.
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Tesla
The short tried hard to crack shares of Tesla ($TSLA)after the company announced surging Model S and X deliveries while falling short on the expectation of 1,500 units for its highly anticipated mass-market, $35,000, Model 3 four-door sedan. Tesla only managed to deliver 220 units, due to what the company called a “bottleneck.” But it should not have come as much as a surprise, considering Elon Musk made comments at the Model 3 debut about entering production hell.
The chart below shows the shorts tried to crush the stock taking the shares to $330, but the buyers came in mass and took shares of the stock higher, on a massive surge of volume. Shorts gave it there best try, but were unable to crack the stock, and is a perfect indication that Tesla is headed in only one direction, and it isn’t lower.
TESLA by Scorpio244 on TradingView.com
Netflix
FAANG stocks saw a significant surge during the week, with shares of Netflix ($NFLX) jumping by over 9 percent after the company announced it would raise the price on two of its subscription packages. The stock broke out, surpassing its old technical resistance level at $190 and seems primed to continue to surge higher, closing the week at $198. The company is set to report third-quarter results on Monday, October 16, after the close of trading. According to YCharts, estimates are calling for third-quarter revenue to have risen by nearly 30 percent y/y to $2.971 billion, while EPS is expected to have surged by 164 percent to $0.32.
One has to think that Netflix saw something in its subscriber numbers from the third quarter to give it the confidence to raise its subscription pricing at this point of the year.
NFLX by Scorpio244 on TradingView.com
Amazon
Amazon ($AMZN) shares also broke out during the week, with the stock appearing to make a run at its old highs last seen over the summer.
AMZN by Scorpio244 on TradingView.com
Alphabet ($GOOGL), also known as Google to many, jumped as well during the week and like Amazon appears to have broken out.
Googl by Scorpio244 on TradingView.com
Acadia
In Biotech, the story of the week is Acadia Pharmaceuticals ($ACAD) and the news they would be launching a Dementia-Related Psychosis Phase III trial. The company already has the drug, Nuplazid, approved for Parkinson disease psychosis, and is also running trials in Depression and Schizophrenia. The biopharma is looking to expand the label on Nuplazid (Pimavanserin) and its targeted markets are very large, giving the company very ample revenue opportunities in the future.
Acadia has been a stock with a very large short base for many years. Many shorts seem to doubt the efficacy or the need for Nuplazid. But the short’s seem to miss the bigger picture. The patients with Dementia-related psychosis are often very elderly and very sick. The current treatment options use off-label atypical antipsychotics, such as Seroquel or Risperdal, come with very severe side effects, where Nuplazid has fewer. Additionally, in a psychiatric condition, not all drugs work the same way for each patient. For example, it is entirely possible for a depressed person taking Zoloft to get an inadequate response but when switched to Cymbalta, achieve a positive response. The same holds true in atypical antipsychotics.
The stock gapped higher after the announcement of the trial, but the short sellers came in an pressed the shares lower. But the stock came roaring back into the close of Friday. The long’s could have called it a week and let the stock come in and finish the week lower. But the stock managed to recover its losses and ended the day and week higher.
acad by Scorpio244 on TradingView.com
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Michael Kramer and the Clients of Mott Capital own shares of Acadia, Tesla, Alphabet, Netflix
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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