Nektar Therapeutics (NKTR) Falls Victim to the Index Curse
Nektar Therapeutics (NKTR) is a biotechnology firm that partners with drug-makers like Bristol-Myers Squibb (BMY), Pfizer (PFE) and AstraZeneca (AZN) to improve upon pre-existing drugs and treatments. Once these products are approved by regulators, the company generates revenues through royalties. After yesterday’s close, NKTR reported second-quarter earnings. The company reported revenues of $23.32 million which was below estimates of $26.65 million.
Today, the stock is trading 32.4% lower but the drop wasn’t entirely due to earnings. NKTR also announced that one of its pipeline drugs being developed with BMY had manufacturing errors that caused issues in its clinical trials. This resulted in multiple analyst downgrades; tacking on another of many negative catalysts the stock has seen in the last year. In addition to this most recent issue, in late July, the company had disclosed delays concerning another drug after the FDA considered opioid regulation changes.
The last year and a half has been tough for NKTR, but what’s even worse is that all of the problems for the stock started to happen right when it was added to the S&P 500 in March 2018. NKTR has now been in the S&P 500 for 352 trading days and during that time it has averaged a daily decline of 0.36% with the stock dropping from $105.01 to below $20 today. That’s a decline of over 70%. For comparison, in the same number of days leading up to its inclusion to the S&P 500, NKTR had averaged a daily gain of 0.7% and had increased 740.8%. Talk about a bad case of the index curse! Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.
Perfect “Shrug” Pattern Emerges for the S&P 500
The S&P 500 ripped higher by nearly 2% yesterday on no significant news, and when combined with gains seen over the prior two days, the index gained back all of its losses from Monday’s 3% drop.
The technicals show a near perfect double bottom formed from the intraday lows on Monday and Wednesday. The 2,830 level proved to be very strong support that saw buyers step in just when things looked their bleakest this week.
To throw some levity into the mix, the intraday chart of the S&P 500 over the last week has amazingly formed a perfect “shrug” pattern from the famous emoji that you’ve likely seen before in texts or on social media (especially if you have teenage kids)! A picture is certainly worth 1,000 words. Talk about the perfect description of this market! Start a two-week free trial to Bespoke Premium to get Bespoke’s best equity market research.
Trend Analyzer – 8/9/19 – Rebound
Equities are still lower than they were at the end of last week, but the past few days have seen a massive rebound which has eliminated most of the past week’s declines. Yesterday’s rally brought most of the major index ETFs back above their 50-DMAs. Only the Dow (DIA), Micro-Cap (IWC), and Russell 2000 (IWM) did not manage to break back above these levels. While IWM and DIA are both less than 0.4% away from their 50-day, IWC has much more progress to make until it does the same as it sits 2.39% below its moving average. IWC is also the only ETF of this group that is oversold and in a downtrend. Other major index ETFs have held onto their uptrends and are still showing good timing scores.
While the past week’s price action has been volatile, from a purely technical standpoint the past few days’ gains have marked a higher low on a longer-term chart for many of these ETFs. The Dow (DIA) and mid-cap ETFs like the Core S&P Mid-Cap (IJH) and S&P MidCap 400 (MDY) all found logical support close to the 200-DMA. On the other hand, IWC’s bottom earlier this week marked a lower low. Start a two-week free trial to Bespoke Institutional to access our Trend Analyzer, Chart Scanner, and much more.
B.I.G. Tips – Earnings Season Summary and Top Triple Plays
We’ve just published a B.I.G. Tips report that provides a full summary of the ongoing earnings season along with the newest edition of our Top Triple Plays. This season we identified 22 earnings triple plays that have attractive price charts right now.
What is a triple play? When a stock reports quarterly earnings, it registers a “triple play” when it beats analyst EPS estimates, beats analyst revenue estimates, and raises forward guidance. We coined the term back in the mid-2000s, and you can read more about it at Investopedia.com. We consider triple plays to be the cream of the crop of earnings season, and we’re constantly finding new long-term buy opportunities from this basket of names each quarter. You can track the newest earnings triple plays on a daily basis at our Triple Plays page if you’re a Bespoke Premium or Bespoke Institutional member.
To read our newest report and see the triple plays that we think look the best right now, start a two-week free trial to Bespoke Premium!
Bespoke’s Morning Lineup – A Mild Hangover
Thursday’s rally in US equities helped cap off one of the most impressive rebounds in recent memory as the S&P 500, Nasdaq, and even the Russell 2000 erased all of their losses from Monday. After the massive party, we look to be closing out the last day of the week with a bit of a hangover. Markets in Asia were mixed overnight, but Europe is broadly lower with declines of over half of one percent. US futures are also indicating a similar decline at the open, while treasury yields are modestly lower across the board. Oil is still down 4% on the week but is up more than 5% from its lows on Wednesday, while gold remains above $1,500 per ounce. Continue reading in today’s Morning Lineup.
Bespoke Morning Lineup – 8/9/19
The Closer – Round Trip – 8/8/19
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight on markets? In tonight’s Closer sent to Bespoke Institutional clients, we give a quick update on the technicals of the S&P 500 this week, showing the double bottom made over the past few sessions. We also show where the S&P now sits within its trading range, the relative strength of the sectors since the Fed’s rate cut, and recent price action in semis. We finish with a look at this week’s Initial Jobless Claims and AAII sentiment survey before one final note on earnings.
See today’s post-market Closer and everything else Bespoke publishes by starting a 14-day free trial to Bespoke Institutional today!
Bespoke’s Sector Snapshot — 8/8/19
The Bespoke 50 Top Growth Stocks
Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000. Our “Bespoke 50” portfolio is made up of the 50 stocks that fit a proprietary growth screen that we created a number of years ago. Since inception in early 2012, the “Bespoke 50” has beaten the S&P 500 by 131.8 percentage points. Through today, the “Bespoke 50” is up 244.3% since inception versus the S&P 500’s gain of 112.5%. Always remember, though, that past performance is no guarantee of future returns. To view our “Bespoke 50” list of top growth stocks, please start a two-week free trial to either Bespoke Premium or Bespoke Institutional.
Chart of the Day: Big Spikes in Bearish Sentiment
Can You Be Surprised With Roku (ROKU)?
Roku (ROKU) is the second best performing stock in the Russell 1000 today with a gain of more than 20%. The catalyst for this move is a strong earnings report after the close yesterday. ROKU is also one of ten stocks that reported a triple play in the past 24 hours. On top of raised guidance, ROKU also reported revenues of $250.1 million compared to estimates of $223.36 million, representing a 59.5% growth rate from a year ago and the second-highest sales figure for any quarter in the stock’s history.
While the larger than 20% move may jump out, looking through the stock’s earnings history in our Earnings Explorer tool, for ROKU it is actually more or less par for the course. ROKU has been one of the most volatile stocks on earnings, averaging a move on its earnings reaction day of +/-24.47%. The company has also reported two other triple plays in its seven prior reports; once in its first-ever report in November of 2017 and again last quarter. Both of these saw extremely positive reactions with a 54.94% full-day gain in 2017 and 28.11% gain last quarter. If ROKU manages to hold onto this 20% gain through the close, it will mark the third straight quarter with an over 20% gain in response to earnings.
