Top 1H health-sector winners and losers; buy/sell opinion.

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The News:

Now that we’ve reached the end of the first half of 2018, there might be some interesting surprises–both good and not-so-good–for those equity investors interested in who’s being rewarded/punished so far, year-to-date.

The Technical Opinions rendered below are based on an Overall Average Signal (OAS), which is calculated from all of the following 13 different indicators:

1) TrendSpotter (A computerized trend analysis system developed by Barchart.com. The system uses a combination of wave theory, market momentum and volatility in an attempt to find a general trend for a specific market. TrendSpotter attempts to cut losers early and let winners run.)

2) 7 Day Average Directional Indicator

3) 10 – 8 Day Moving Average HiLo Channel

4) 20 Day Moving Average vs Price

5) 20 – 50 Day Moving Average Convergence Divergence (MACD) Oscillator

6) 20 Day Bollinger Bands

(Bollinger Bands are volatility bands placed above and below a moving average.)

7) 40 Day Commodity Channel Index

(The Commodity Channel Index​ “CCI” is a momentum-based technical trading tool used most often to help determine when an investment vehicle is reaching a condition of being overbought or oversold.)

8) 50 Day Moving Average vs Price

9) 20 – 100 Day MACD Oscillator

10) 50 Day Parabolic Time/Price

(The Parabolic Time/Price System is used to set trailing price stops and is sometimes referred to as the stop-and-reversal or “SAR.”)

11) 60 Day Commodity Channel Index

12) 100 Day Moving Average vs Price

13) 50 – 100 Day MACD Oscillator

Signal Strength is a long-term measurement of the historical strength of the OAS, while Signal Direction is a short-term (3-day) measurement of the movement of the OAS.

Steve’s Take:

So, here are the four top leaders and one serious laggard among healthcare equities and the technical recommendations, compliments of our friends at Barchart.com.

Keep in mind that although health care has been generally strong so far this year, I believe we’re now in overbought territory, especially given the record-shattering biotech IPOs priced in the first half. Be on the lookout for a trend reversal.

San Diego-based Tandem Diabetes Care Inc. (Nasdaq:TNDM) led advancing issues, year-to-date, with a jaw-dropping explosion of 871% to $22.91 as of Monday, July 9. Tandem is a medical device company that designs, develops, and commercializes products for people with insulin-dependent diabetes. Its products include the t:slim Insulin Delivery System, the only touch-screen pumps available in the US.

Technical Opinion: Strong (72%) Buy with a Strengthening short-term outlook on maintaining the current direction.

Longer term, the trend strength is Strong. Long-term indicators fully support a continuation of the trend.

Arrowhead Pharmaceuticals Inc. (Nasdaq:ARWR) rocketed 346% to $16.40. Pasadena, CA-based Arrowhead is a biopharmaceutical company which develops novel drugs to treat intractable diseases primarily in the US. The company’s proprietary Dynamic Polyconjugate platform develops drugs based on the RNA interference mechanism which silences disease-causing genes. Its products include ARC-520, ARC-521, ARC-AAT, ARC-F12, ARC-HIF2 and ARC-LPA which are in different clinical trial phases.

Technical Opinion: Strong (100%) Buy and ranks in the Top 1% of all short-term signal directions.

Longer term, the trend strength is Maximum. Long-term indicators fully support a continuation of the trend.

ArQule Inc. (Nasdaq:ARQL) has soared 305% YTD to $6.69. ArQule is a biotechnology company engaged in the research and development of next-generation, small-molecule cancer therapeutics. The company’s targeted, broad-spectrum products and research programs are focused on key biological processes that are central to cancer.

ArQule’s lead clinical-stage products have been generated from two scientific platforms: Cancer Survival Protein modulation and Activated Checkpoint Therapy. The Cancer Survival Protein modulation platform has generated a clinical-stage product that mediates its effects by inhibiting the activity of a molecule known as c-Met, which plays multiple roles in cancer cell growth, survival, invasion, angiogenesis and metastasis.

The ACT platform is designed to kill cancer cells selectively while sparing normal cells through direct activation of DNA damage response/checkpoint pathways. The Burlington, MA-based company’s lead ACT program, based on the E2F-1 pathway, is partnered with Swiss-based Roche Holding AG.

Technical Opinion: Strong (100%) Buy with a Strongest short-term outlook on maintaining the current direction.

Longer term, the trend strength is Maximum. Long-term indicators fully support a continuation of the trend.

Endocyte Inc. (Nasdaq:ECYT) zoomed 286% to $16.50. Endocyte is a biopharmaceutical company engaged in the development of therapies for the treatment of cancer and inflammatory diseases. The company creates novel small molecule drug conjugates (SMDCs) and companion imaging diagnostics for personalized targeted therapies. Endocyte, Inc. is based in West Lafayette, IN.

Technical Opinion: Strong (100%) Buy and ranks in the Top 1% of all short-term signal directions.

Longer term, the trend strength is Maximum. Long-term indicators fully support a continuation of the trend.

But Reshape Lifesciences Inc. (Nasdaq:RSLS) plunged 90% to $2.18. San Clemente, CA-based ReShape is a developer of invasive medical devices to treat obesity and metabolic diseases. The company’s portfolio includes vBloc System, ReShape and Gastric Vest System. ReShape Lifesciences Inc. was formerly known as EnteroMedics Inc.

Technical Opinion: A (72%) Sell with a Weakest short-term outlook on maintaining the current direction.

Longer term, the trend strength is Average. Long-term indicators fully support a continuation of the trend.

I hope this has been helpful in marking the disparity between the very high highs, which also included Innovate Biopharmaceuticals Inc. (Nasdaq:INNT), up 281% YTD, Madrigal Pharmaceuticals Inc. (Nasdaq:MGDL), up 227%, and Mirati Therapeutics Inc. (Nasdaq:MRTX), up 190% and complete tank jobs like Evofem Biosciences Inc. (Nasdaq:EVFM), down 78% to $2.61 and Summit Therapeutics PLC (Nasdaq:SMMT), off 78% to $2.49.

Caveat:

The Technical Opinions rendered above are not a recommendation to buy or sell a security. Your decision whether or not to make a purchase or sale should be based on your own due diligence and not on any representation made herein.

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