Blog

Fundamental/Technical Look at Ocular Therapeutix

  • Healthcare has been quietly making a comeback, which has gained steam recently capturing investors attention. On a one month timeframe the XLV is the second best major S&P sector performer higher by 6.5%, and on a 3 month span it is also the second best actor advancing 8.5%, bested only slightly by technology which added 8.7%. Tonight we take a peek at an overlooked name, that looks attractive from both a fundamental and technical perspective Ocular Therapeutix.

Biotech Observation:

  • Ocular Thx: (OCUL) price 8/1: $5.58: the company is looking for AB/Steriods application, Dextenza (hydrogel soluble technology whereby punctal plugs are placed in the canaliculus that release the drugs resulting in less pain and absence of anterior chamber cells), in a user friendly way for especially the forgetful elderly after cataract surgery treatment, Ocular is also developing treatments for glaucoma (OTX-TP, OTX-TIC) and wet AMD (OTX-TKI and OTX-IVT). Dextenza although cleared for it efficacy by the FDA still has to clear some CRL/GMP issues that arose under the old management. The PDUFA (Presecription Drug User Fee Act) date which is the deadline for the FDA to approve Dextenza is December 28, 2018. Management is confident that the manufacturing issues will be solved to the satisfaction of the FDA. This should clear the path to marketing Dextenza !Q19. Ocular estimates the market to be 2m Med Part B surgeries x $500 (per unit) = $1bn annually. Quick market acceptance is expected since the product is a clear improvement to drop therapy and should be associated with a procedure code that will provide a new income stream for doctors and surgery centers. Considering that many manufacturing changes have been implemented and can be altered if needed, it will be just a matter of time before Dextenza will come to the market. With many more applications for this technology a market cap of$205m (and estimated Enterprise Value of $205m-$60m=$145m)  Ocular looks very attractive!!! 8/1 Market cap: $205m, Shares O/S: 37m, adv: 384k, Cash 31/3: $62.9m, High 2015: $43. Gijsbert Groenewegen

Analyst Coverage:

  • Cantor Fitzgerald set a $22.00 price target on Ocular Therapeutix and gave the stock a buy rating in a research report on Tuesday, May 8th.
  • HC Wainwright set a $10.00 price target on Ocular Therapeutix and gave the stock a buy rating in a research report on Wednesday, May 9th.
  • ValuEngine upgraded Ocular Therapeutix from a strong sell rating to a sell rating in a research report on Wednesday, June 13th.

Institutional Investors:

  • BlackRock Inc. boosted its stake in Ocular Therapeutix by 0.8% in the fourth quarter. BlackRock Inc. now owns 1,418,577 shares of the biopharmaceutical company’s stock valued at $6,312,000.

Technical Take:

  • Here we take a look at the technical story of the chart on both a daily and monthly basis. On the daily chart below the stock has not been this oversold in 6 months, below the 30 RSI number. Tuesday ended a 7 session losing streak, and the first two days of the week recorded bullish candle. Notice the short term top at just above 8 registered a doji candle on 6/14, which correctly warned of potential weakness.

  • On a monthly interval the chart looks even better. It has built its bottom in a slow and steady fashion, and looks poised to travel toward the very round 10 number where it was met with stubborn resistance between November '16-July '17. Notice nearly every one of those months traded above 10 intramonth, but only one month mustered a CLOSE above 10 in May '17.

 

 

 

Be Sociable, Share!

ChartSmarter Wednesday Game Plan 8/1/18

Markets:

  • What goes up must come down, or at least that how the saying goes. The phrase in reverse was a good description of "turnaround" Tuesday. However it seems like many are acting like this is yet another possible rapid V shaped recovery, perhaps too many. And it may be, but as always ignore all the noise and focus on PRICE action. The Nasdaq recorded a bullish harami and CLOSED above its 50 day SMA in the process, although it recovered very little of the nearly 4% drop the prior 3 days. It bounced off the round 7600 number Monday and that could be a line in the sand for shorter term traders. The Nasdaq is looking at a potential 3 week losing streak, a feat that has not occurred in almost exactly one year.
  • The ongoing tug of war between the bulls and bears regarding the Russell 2000 was won by the bulls Tuesday as it was the best major index performer jumping 1.1%. Keep in mind both it and the Nasdaq were big losers last week slumping 2 and 1.1%, so they should be kept in the penalty box until PRICE proves otherwise. Toward the end of an aging bull the defensive Dow and individual names that fall into that category will outperform and be the last that investors tend to part with. And that is what precisely happened last week. It is still early to declare that, but something that should be monitored very closely heading into the fall.

Sectors:

  • Industrials scored a powerful session as the XLI rose more than 2%, doubling the losses from Mondays decline. The ETF is looking for its fifth consecutive weekly advance, and if it does so would be its first since last October. Like many other groups it is building the right side of a cup base that began this January at the round 80 number. It recorded just three CLOSES above 80 in 2018 (on 5/3 it registered a nice bounce off the 70 number), and the three weeks ending between all CLOSED taut within just .97 of each other. MMM, the second largest component in the fund is readying itself for an upside gap fill from the 4/23 session.
  • Financials and energy lagged Tuesday. The XLF fell .7% and was pushed back in the mid 28's where it has encountered trouble since dropping below in late March. Today recorded a bearish engulfing candle following Mondays doji, and the last 4 days have now CLOSED in the lower half of the daily range. Sentiment seems to be high that this sector will benefit from a couple more interest rate hikes this year. The ETF trades 8% off most recent 52 week highs and I would prefer to witness some tighter trading on its chart, the opposite of what has been taking place.

Special Situations:

Healthcare continues its ascent and most names obviously within the space will be dragged up with it. A vast majority of a stocks performance will be directly related to the sector with it trades. Now sure there will be winners and losers and some winners will handily outperform others. Some of the more mature names in the group are seen as value names, another reference to the growth vs value debate, and that could be a tailwind for some of these seasoned larger cap names. And to boot they will normally be accompanied by a juicy yield. The chart below of AZN, was how it was presented in our Thursday 7/19 Game Plan, sports a very nice dividend yield of 4.7%. It is looking for a 6 week winning streak and is approaching a huge cup base add on trigger of 41.44 that began the week ending 5/2/14.

Be Sociable, Share!

ChartSmarter Tuesday Game Plan 7/31/18

Markets:

  • They say its not how you start, but how you finish, and that applies to investing too. But the Nasdaq weakness of 1.4% today has to be concerning, after last weeks loss of 1.1% that CLOSED 200 handles off intraweek highs. Keep in mind there have been TWO doji WEKLY candles in the last 6 weeks (there was just 4 in all of 2017) and often one can be just a warning. Two so close in succession is a stronger worry. More important is the action in leading stocks and they have been flashing warning signs too. Sure we all know what TWTR and FB did last week, but other names being technically harassed include PYPL, ABMD and GOOS.
  • The S&P 500 registered just its fourth 3 day losing streak in the last 4 months, to demonstrate how strong the benchmark has been. The 2800 number continues to hold, but the Russell 2000 CLOSED beneath its 50 day SMA for back to back days for the first time since early April. The VIX which we mentioned numerous times had been recording multiple spinning top candles, which are indicative of a potential change in the prevailing trend, rose 9% Monday. We have seen brief spurts above in May and June and one has to be impressed with its staying power as it looks to break above the secular line once again. This week will see heavyweights like AAPL reporting after the close tomorrow have a profound effect where its short term direction will head to.

Sectors:

  • Energy continues to drill higher, pun intended, confounding most I would think. Is it a product of a strong 4.1% GDP number last Friday which indicates the economy is revving along? The XLE rose .9% Monday, easily the best performing major S&P sector and one gets the feeling the ETF has a strong move ahead with the current beachball being held underwater effect. The bearish descending triangle is quickly losing relevance as a cup base trigger of 79.52 will be the focus going forward.
  • On the other spectrum was technology as the XLK slumped 1.5%. The ETF is now a quick 5% off most recent all time highs and Monday undercut its 50 day SMA. It is now well below its prior cup base breakout trigger of 72.48 and is now testing a prior cup with handle breakout trigger of 70.52 taken out on 6/1. My personal belief is their is more weakness ahead in this group and their is better place to park your capital. One can always reenter if and when the spaces reestablishes itself. Until then there a better fish to fry and cash may be king.

Special Situations:

The chorus of calls calling for value to outperform growth are becoming deafening. To be fair I guess I am in that camp as I reviewed my former reports and there seems to be an abundance of symbols with two or three letters (most Nasdaq names have 4 letters). The consensus could be concerning, but that is always seen in hindsight. Below is the chart of a classic value play GM and how it was presented in our Friday 7/27 Game Plan. Frankly I am a momentum player that likes to buy on strength, but you have to be able to adapt and GM has a few things going for it. Number one it filled in a downside gap last week which also recorded a bullish hammer candle on 7/25. This scenario offered good risk/reward and so far so good. Start your engines or value trap? As always know your out and be patient as long as the catalyst still exists.

Be Sociable, Share!

ChartSmarter Monday Game Plan 7/30/18

Markets:

  • The Nasdaq followed through on its doji candle Thursday to the downside Friday falling 1.5%, its worst loss in July and its only 1% plus decline this month with one day left. Its daily range was more than 150 handles and three of the last 4 sessions CLOSED near the lows for the day. It is now 1% above its upward sloping 50 day SMA, a line it has been above for 3 months, and a move below could preempt a move toward the 200 day which it last came close to touching in February and April. We all know of the FB, INTC and TWTR hits this week, but other big Nasdaq names that recorded poor weekly candles were BIIB and PYPL.
  • Their was big bifurcation this week as the Dow and S&P gained 1.6 and .6%, while the usually forward looking Nasdaq and Russell 2000 FELL 1.1 and 2%. With all the bearish headlines you will read this weekend, remember they generate more attention than bullish ones, the S&P 500 is on a 4 week winning streak. Volume has increased with each successive week, but this one did record a shooting star as it neared the right side of its cup base that began in late January. The last 2 days action could end up being a handle on that cup and give it credit as it trades above the important 2800 number.
  • The biotech space is one that investors should be eyeing this summer. Looking at the XBI I figured it would be a rough week with BIIB's 50 handle reversal, but it is just the 10th largest holding in the ETF (no name has a greater than 1.62% weighting which is a positive). Delving into the PRICE action, which supersedes everything, it was not surprising to see the 5.2% drop as it was unable to break ABOVE a 3 week tight pattern, as the weeks ending all CLOSED within just .43 of each other. This occurred at the very round par number too, and a move toward the round 90 figure would offer a good entry in my opinion. That doubles at the moment with its rising 200 day SMA.

Sectors:

  • Lets start with the bad here because it was rotten, as technology lagged Friday with the XLK slumping 1.7%. More importantly on a weekly basis it recorded a bearish shooting star candle falling 1%, after the prior week registered a doji candle. It is now below a 72.53 cup base trigger and we know the best breakouts work right away, so to see this action so promptly is certainly a worry. Volume trends are concerning, as there has still yet to have been a week of accumulation in 2018. Sure one can blame the summer months recently, but the overall debate on trade is getting a bit long in the tooth.
  • As poorly as the week felt 7 of the 9 major S&P sectors rose on a weekly basis (discretionary and technology fell .5 and 1%), three groups rose more than 2%. The industrials and financials gained 2.1% via the XLI and XLF, but energy led as the XLE added 2.3%. My bearish thought may need to be amended as more positive as it has now touched the 78-79 level FOUR times since December '16. An old salty trader friend of mine used to love to say their is now such thing as a quadruple top, but I still need to see PRICE move through the level. Above 80 could be a huge breakout, but of course we are still a few percent away but we are very patient investors.

Special Situations:

One can make the argument that the semiconductors have been missing in action through the overall tech rally. The SMH is lower by 7% off most recent 52 week highs as the Nasdaq is just 2% off its own. Of course many in the space are much lower than that as INTC is now 17% off its own highs and former best of breed AVGO is deep into bear market mode 23% off its recent highs. Below is the chart of another former leader AMD and how it was presented in our Monday 7/9 Game Plan. It recorded a very strong 10 week winning streak which began at the very round 10 number in late April and the very tight trade has to be admired. That is until the last 2 days of the week as Thursday-Friday rose by a combined 17.6%. Not surprisingly, this name was stopped just shy of the very round 20 number Friday, and look for some consolidation in the coming weeks there before another potential move higher. Dips are to be bought in this name going forward.

Be Sociable, Share!

ChartSmarter Friday Game Plan 7/27/18

Markets:

  • The Nasdaq was the big laggard Thursday, and you had to be living under a rock for the day if you did not hear the incessant chatter regarding FB earnings. It makes up more than 4% of the index, and I think the Nasdaq deserves a lot of credit for maintaining its CLOSING above the round 7800 number which negated the bearish engulfing candle their on 6/21. Keep in mind that precipitated a 400 handle drop top to bottom in just the next 6 sessions. Important going forward will be the health of the AAPL breakout above a 194.30 cup base trigger on 7/25 which stalled today (it is the largest component in the Nasdaq making up 6.6%). We know the best breakouts work right away.
  • Do not sleep on the Russell 2000 as it approaches the round 1700 number (it was above intraday but we are always interested only in CLOSES). It outperformed handsomely Thursday rising .6%. The S&P 500 and Dow are enjoying nice gains thus far for the week with Friday to go higher by 1.3 and 1.9% respectively. 
  • The gold bugs are having a rough go of it as the GLD has lost value 10 of the last 14 weeks, and is down another .7% this week heading into Friday. The ETF is now 11% off most recent 52 week highs, and the tape on some of the individual names is stunning. GOLD is now 33% off most recent 52 week highs, and best in breed RGLD is now 10% off its and it has been waffling since a bearish gravestone doji candle the week ending 7/6. Intraweek that week it was above a nice looking cup base trigger of 94.49 in a 10 month pattern.

Sectors:

  • Energy, industrials, staples and utilities led Thursday. The XLE rose by 1.2%, and to its credit has not followed through to the downside following the heavy volume bearish engulfing week ending 5/25 that slumped 4.5%. The ETF is enjoying its best week higher by 2.8% heading into Friday and if it holds would be its best weekly gain in the last 11. I have been skeptical on the group, and if it breaks above 78, the bearish descending triangle would prove my negative thesis wrong.
  • Lagging Thursday was technology as the XLK fell by 1.8% as FB cratered nearly 20%. Bulls will point that it is just giving up a chunk of its 40% advance from its last earnings reaction. To me that is a weak argument, and a good illustration of the old adage taking the elevator up and the staircase down. The velocity of the move to the downside is concerning, and I would personally need to see some bottoming candles or even a gap fill toward the round 160 number from the 4/25 session, the level of where it last reported numbers.

Special Situations:

At ChartSmarter I purely make decisions based on PRICE action as I am a technician. Now of course I will look at some fundamentals, albeit vaguely. I will see how an earnings story may be generating a turnaround. Sometimes one can see a better management team in place comparing peers, but to me that will always be seen within the confines of the chart. Below is a good example with HAS, and how it appeared in our Thursday Game Plan this week,  as it delivered a nice earnings reaction on Monday up nearly 13%. Peer MAT, its redheaded stepchild in my humble opinion, registered a soft reaction today getting hit by more than 4% (one other player in the small field JAKK is barely relevant and is way off all time highs from June '07). That may have given investors an entry into HAS today on weakness, as it has now CLOSED four consecutive times above the very round par number.

Be Sociable, Share!