Markets are off to a good, but cautious start this week.
The S&P 500 eked out a fresh record for the third straight day on Monday. Investors have grown increasingly comfortable with the notion that inflationary pressures are indeed transitory.
Yet investors sold stocks after the Federal Open Market Committee (FOMC) signaled that rates are set to rise starting in 2023. We believe this was a knee-jerk reaction as the Fed is still a long way off from doing anything. Dips should be bought in this case.
Although trading volume has been light and volatility muted as we enter the summer doldrums, the major averages have managed to inch forward over the past month.
The Nasdaq Composite has rallied more than 1,000 points off its May 12th bottom with technology and growth names again finding favor with investors.
One of the hottest industry groups in the Nasdaq has been biotechnology.
Here we provide an update on three Nasdaq biotech stocks that have been covered before at Insider Financial. With the biotech space being one of the most volatile areas of the market, the upside potential can be enormous as we’ve already learned from AVXL, NOVN, and SRNE.
And an update on big momentum stocks wouldn’t be complete without checking in on everyone’s favorite meme stock—AMC.
STOCKS TO WATCH #1 AMC
AMC’s meteoric rise has been well documented. Everyone seems to know a friend of a friend who jumped in on the hot media topic.
At Insider Financial, the recent AMC explosion was well telegraphed to subscribers before things started heating up. We wrote about AMC when it was still trading below $20 which gave investors an opportunity to more than triple their money in four trading days. You can find that story here.
In fact, AMC is a double feature presentation at Insider Financial. Back on February 23rd, we showcased AMC right before it jumped from $3.51 to a peak of $20.36 in three days. As it turns out, that was the sneak preview to this month’s main event and you can read that here.
So what’s been going on with AMC since it soared above $70 on June 2nd? Well, after a profit-taking dip below $40, the stock has held up remarkably well.
Social media interest in the stock has remained strong and AMC has strung together a three-day run that has it trading back above $60.
The AMC drama is likely far from over. Messages on Reddit’s Wall Street Bets, StockTwits, and iHub continue to support the stock. Some are calling for a push to $100. The wildest of bulls are speculating AMC can go to $1,000.
The company has pressed the pause button on the press releases following a flurry of equity raising activity from June 1-3. This was designed to take advantage of the inflated share price.
Last week AMC announced that there were approximately 4.1 million individual shareholders eligible to vote at the July 29th Shareholder Meeting. Whew, that’s a lot of chairs to setup! Advance proxy voting starts June 16th although most will have to wait until the day of the meeting.
AMC stock is fully unhinged from its fundamentals and being driven by a coordinated bandwagon of social media traders. Therefore, it’s anyone’s guess as to where it goes from here.
But with short interest still about 23% of the float, the potential for another big squeeze is there. If another plot twist happens, the $72.62 peak could be surpassed in a heartbeat.
STOCKS TO WATCH #2 AVXL
AVXL has been in heavy rotation at Insider Financial over the last couple of years. Back on October 16th, 2020 we said that the biotech stock was getting ready to make a big move. You can read about that here. Within a couple of weeks, AVXL went on a 59% run to $7.69—but that wasn’t the main event.
On February 4th, the former penny stock raced to a high of $28.70 on building optimism around the company’s lead asset ANAVEX 2-73, a potential treatment for Alzheimer’s disease, Parkinson’s disease, and Rett syndrome.
After a big profit taking pullback commonly seen after such massive runs, AVXL started forming a new base in the $10 to $15 range.
Investors in tune with the technical chart patterns began buzzing about a bullish continuation pattern on the daily chart. This formed at the end of March when AVXL was around $15. It pointed to a near-term run back to the $20 level.
It took longer than anticipated to get there, but AVXL finally crossed the $20 mark this week.
Momentum is once again building in the stock. Avanex reported that ANAVEX 2-73 as well as another promising drug candidate ANAVEX 3-71 appeared in a peer-reviewed publication in the journal of Expert Opinion on Therapeutic Targets.
The paper discussed how ANAVEX 2-73 has been shown to induce autophagy, the process by which the human body cleans out damaged cells to regenerate newer, healthier cells. Defects in autophagy are widely considered to contribute to neurodegenerative process in diseases such as Alzheimer’s. ANAVEX is able to activate the associated Sigma-1 receptor whose expression typically increases with age but decreases in Alzheimer’s patients.
The report again put AVXL in a favorable light and has generated a lot of chatter across social media platforms.
It comes at a time when the medical community is at odds over the FDA’s recent approval of Biogen’s ADUHELM as a treatment for Alzheimer’s disease.
There has been increased investor attention on companies involved in developing Alzheimer’s disease therapies in the wake of the Biogen approval. This may be very good news for AVXL shareholders who are hoping AVANEX will be the next big breakthrough in the field.
AVXL stock broke through in a big way this week jumping 35% on Monday to $20.99.
STOCKS TO WATCH #3 NOVN
NOVN is another Nasdaq biotech stock creating a stir on social media.
Insider Financial subscribers will recognize NOVN as we’ve written about it on several occasions including on February 15th. That can be found here. The stock was on the move after it completed patient enrollment for the Phase 3 clinical study of SB206, a topical antiviral gel for the treatment of molluscum contagiosum.
Molluscum is a contagious skin infection caused by the molluscipoxvirus that affects around 6 million people in the U.S. every year. It is most common in children under 14.
On Friday, Novan announced positive topline efficacy and safety results from that pivotal B-SIMPLE4 trial. The study’s primary endpoint achieved a high statistical significance level with no serious adverse events.
President & CEO of NOVN, Paula Brown Stafford, said, “The positive results from B-SIMPLE4 represent a transformational milestone for our employees, investors, and most importantly, people living with molluscum. The strong safety and statistically significant efficacy results give us confidence as we move forward in preparing a New Drug Application to potentially bring SB206 to market and to patients in need of an effective therapy.”
The company plans to submit a New Drug Application (NDA) to the FDA by the third quarter of 2022.
The news came a day after Novan announced positive preclinical data for its SB019 COVID-19 treatment. Based on a pair of independent in vivo transmission studies, the data showed that the active ingredient berdazimer sodium prevents the progression of SARS-CoV-2 infection. SB019 was found to reduce the amount of the virus in the lung in doses as low as 2mg/mL.
The one-two headline blitz got investors fired up about Novan’s multiple growth prospects. It is also developing potential therapies for other skin disorders as well as for women’s health and gastrointestinal conditions.
Eleven days removed from a 1-for-10 reverse split, NOVN gapped up on Friday before running to $18.68. The momentum has since continued with social media showing a lot of commentary.
With several growth avenues in skin care and the coronavirus, NOVN should definitely be kept on the radar.
STOCKS TO WATCH #4 SRNE
SRNE is a frequent biotech runner that has put together a nice stretch since mid-May.
This is a stock that will put a smile on the faces of Insider Financial subscribers. On July 15th, 2020 we predicted that new highs were ahead for the COVID-19 vaccine play. You can read that article here. From there, SRNE went on a 195% run through August 10th.
There have since been a couple of other nice runs including a two-bagger that took place from January to February of this year. We captured this momentum as well which you can read about here.
SRNE appears to be gearing up for another go-around. The biotech company has continued to develop COVID-19-related treatments and tests while also maintaining focus on its core oncology programs.
This week it delivered favorable news on both fronts.
First, it announced a clinical research agreement with Mayo Clinic along with FDA clearance to move forward with the initial Phase 1b study of Ipilimumab in patients with melanoma. The drug candidate will be administered using the Sofusa Lymphatic Drug Delivery System (S-LDDS). The technology delivers biologic therapies through the skin and directly into the lymphatic system. This is intended to reduce dosing and potentially lead to improved efficacy and safety.
Next, SRNE reported that it received approval from the UK regulatory agency to conduct a Phase 2 clinical trial of its COVI-DROPS. COVI-DROPS, one of several COVID-19 products being developed by SRNE, are administered through the nose to target the original COVID-19 virus and the UK/Alpha and India/Delta variants. The efficacy trial will take place in an outpatient setting and involve newly diagnosed COVID-19 patients.
So, much like NOVN, a good double dose of news for SRNE should keep social media chatter healthy and the stock trending higher.
As we keep saying, there are always opportunities in the markets and it’s our job to find winning stocks before they run for our subscribers. Huge gains can be made in such a short amount of time.
If you like any of these 4 stocks to watch, our best advice is to be patient and throw bids in below the market. Buying dips and selling rips as swing trades remains the best strategy.
It’s also important to look for stocks that have yet to run. There are plenty of opportunities out there and we screen hundreds of penny stocks each week looking for the best alerts for our subscribers.
Remember, all it takes is one or two to become a winner and you’ve crushed the market indices for the year.
As always, good luck to all (except the shorts)!
WHEN INSIDER FINANCIAL HAS A STOCK ALERT, IT CAN PAY TO LISTEN. AFTER ALL, OUR FREE NEWSLETTER HAS FOUND MANY TRIPLE-DIGIT WINNERS FOR OUR SUBSCRIBERS. WE SPECIALIZE IN FINDING MOMENTUM BEFORE IT HAPPENS!
Disclosure: We have no position in any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.
Image by Rudy and Peter Skitterians from Pixabay