Disclosure: Author is Long IMSC, TTNP, SIGA, MNKD, CVM, CTSO, FCEL, CPST.
At the conclusion of each week, we examine some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well.
Last week was one full of elections, and as a result, new governments are now sitting in key positions around the globe, most notably in Greece, France and Egypt. The elections in Greece that were eyed so heavily leading into last weekend failed to impact the global stock markets much since it was generally believed that the newly-elected government of the New Democracy party, headed by Antonis Samaras, would favor the already-imposed measures of austerity that would position the country to remain within the eurozone (EZ).
Since forming the new coalition government, however, Mr. Samaras has indicated that he's leaning towards the postponement of cutbacks and decrease of government spending that were the foundations of any additional bailouts by the European Union as a whole.
That could add a wrinkle to any ideas of a quick resolution to the Greek problem and refuel the belief that the country could still exit from the EZ.
Add to that the ornery nature of new French President Francois Hollande, who is unwilling - at least at the current time - to give up any sovereignty over his own economy in an attempt to head towards unified oversight of European budgets, and this week could spell trouble for the markets once again.
In this regard, all attention will be on Europe this coming Thursday and Friday. Europe's 27 heads of state will hold a summit where Germany's Angela Merkel will attempt to convince eurozone leaders to sacrifice overall control of their budgets to Brussels, which could pose quite the hard sell, judging by the recent comments of Hollande and crew.
On the other hand, a unification of European budgets and debt may be inevitable, and the new Greek and French governments might know this. Right now they may just be saying what they've gotta say to save face with an impatient - and somewhat nationalist - public that refuses to allow the likes of Germany to dictate internal fiscal policy.
It's time for Europe to truly unite and it is imperative for both the short- and long-term stability of the region that positive signs emerge from this week's summit.
Another key election victory that took shape this week was that of Egypt's Mohammed Mursi, a candidate of the Muslim Brotherhood who has now become Egypt's first duly-elected president following the toppling of the Mubarak regime over a year ago.
Egypt's economy is desperate for a return to stability, foreign investment and tourism dollars and the international community will be holding its breath looking for signs that Mursi's moderate campaign stance will translate into a governing policy.
The situation could quickly become critical should the world look upon the Mursi government with sour eyes. Israel is again fighting with its adversaries in Gaza and the Sinai has been left as relatively lawless since the early days of the Arab Spring. Egypt also holds the keys to the corridor between two worlds with the Suez Canal, so any increased unrest or uncertainty could quickly fuel tensions around the region and potentially lead to a spike in oil prices.
Geopolitics will continue to weigh heavily on the day-to-day trading of the broad markets, but financial indicators will certainly play a paramount role, too.
The markets dropped significantly this past Thursday on weak manufacturing numbers from the U.S. and China, ending the day with a 250 point DOW dip. Many major banking stocks were hammered on the day as well, following multiple credit downgrades of the world's largest banks by Moody's Investors Service.
Another news-fueled week should be in store.
Here's a few stocks and stories in various sectors that may trade with the news - or might have some pending catalysts of their own that could buck any developing trends:
JPMorgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC, Citigroup (C) and Morgan Stanley (MS) all suffered credit downgrades at the hands of Moody's last week. Each bank's stock was somewhat hammered during Thursday's downturn, albeit to varying degrees.
Since the banks had plenty of time to sure themselves up since being put on notice earlier in the year, some of the downgrades were not as harsh as were originally expected, which also eased the degree to which shares dropped on Thursday.
When it was all said and done, however, the downturn didn't last long as each company rebounded on Friday, aside from Goldman whose shares traded relatively flat, and gave investors the impression that any setbacks as a result of the downgrades would be minimal.
Given the uncertainty of the markets, especially with the situation in Europe still unclear, it may be too soon to jump enthusiastically all-in on the banking sector just yet. I'm all for playing the big banks when the market turns south, but it's my opinion that these guys are best left to the watch list right now, at least in terms of counting on short-term gains.
For the long-term, however, there's always room for a big bank or two in the portfolio. Or even better, for a nice all-in-one ETF like the SPDR Financial Sector Select (XLF). The key here is to play the dips and count on long-term price appreciation and dividends, but again - the bad news and/or uncertainty for the banks might not yet be fully absorbed as investors pay close attention to bad debt and cash reserves.
We're unlikely to see the mass sell-offs of 2008-09 again, but until the global economy regains 'full steam ahead' momentum, there's still some risk here.
Explosive Trace Detection and Homeland Security:
Implant Sciences (OTCQB:IMSC): Another pivotal week could be in store for Implant Sciences. Shares gained well over 10% last week on a run of positive news releases that are solid indicators that key players in the homeland defense arena are quickly becoming believers of Implant's explosive trace detection (ETD) technology that could soon set the standard for airport and air cargo security around the globe.
With the TSA set to render an approval decision for the Quantum Sniffer (QS) technology in August, Implant is taking swift measures to ensure that the management team and infrastructure is in place in order to meet the potential quick demand of a December 3rd deadline that all air cargo on U.S.-bound passenger airlines be inspected for explosive traces.
The mandate originated from the TSA itself and should Implant receive QS approval, then the company could quickly find itself as the prime benefactor of a slew of new sales contracts, due in large part to the fact that it holds the only non-radioactive ETD technology on the market at the current time. That advantage over the competition is key when considering safety and practicability.
While volume was well above the daily average all last week, over a million shares were traded on Wednesday, a milestone not met since the closing weeks of 2010. With such momentum building and a slew of very notable additions to the management and sales teams, all signs point to the fact that Implant Sciences and its stock could be positioning for a big move.
A hot stock to watch during the coming week.
Capstone Turbine (CPST): For another volume player from last week look no further than Capstone Turbine. Although the latest earnings report failed to impress investors who are still cuing in on signs that profitability is on the horizon, another round of large orders caused the CPST trading volume maintain levels well above the norm for the duration of the week.
The spike in volume culminated on Friday by a jump of more than triple the previous day's number and will have investors lined up on Monday waiting to see what's coming next.
On Tuesday of last week the company announced that it had
secured the 4 megawatt order for 17 Capstone microturbines to generate prime power at nine remote LUKOIL-PERM oil fields in Russia.
Follow-up news on Friday announced another 12-unit order from a US customer and could have been the primary cause to the spike in trading volume for that day.
Any bout of increased trading volume will also draw speculation that some of the shorts may be starting to cover. Twenty percent of the float is currently sold short, a significant number, but any mass covering likely will not take place until earnings stabilize to the point where they meet the expected number of analysts.
That said, the revenue, margin and backlog trends continue to remain encouraging for Capstone and the boost in volume will have this 'clean energy' stock on the radar for the coming week.
Also of note, Capstone was downgraded last week by analysts at FBR Capital from 'outperform' to 'market perform', with a price target drop to $1.50 from $2.50. Still, a run to a buck fifty from the current levels would be a significant one in terms of percentage gains and would certainly still outperform the market, which ultimately negates the new rating.
FuelCell Energy (FCEL): FuelCell is another clean energy company that experienced a more-than-noticeable increase in volume to close last week. A closing-minutes price surge on Friday capped off a strong-volumed day that saw nearly triple the average amount of shares trade hands before it was all said and done. Unlike Capstone, FCEL does not carry too high of a short percentage so any price spike could be assumed to be based on merit, and not necessarily covering.
Reports that surfaced last week note that a lawsuit was filed on behalf of FuelCell in federal court in Delaware that accuses Delaware government officials of "economic protectionism and discrimination in helping California-based Bloom Energy."
The suit was filed by Cause of Action, a Washington D.C.-based legal advocacy group that is representing FuelCell Energy and a Delaware resident.
There's not much in these news clips that would suggest cause for Friday's 5% price spike on big volume, but something looks to have piqued investor interest during the closing moments of the day.
With the potential of FuelCell to play a large role in the future of clean energy, it's worth keeping an eye on this one anyway as an accumulation play while trading for a buck. The noticeable boost in volume makes the story that much more intriguing.
Microsoft (MSFT): Trading up by 2% on Friday, Microsoft starting making some noise of its own last week with the announcements that it will launch the "Surface" later this year into the heart of the tablet market and compete directly with Apple's (AAPL) iPad.
Microsoft stood by for years as Apple launched itself into the relative stratosphere with its iPhones and iPads - while stealing market share from MSFT in the PC market as well - but a few recent moves show that Microsoft is ready to take the battle back to the consumer.
The "Surface" tablet computer will be on the market by the holiday season, according to recent reports, with the software and hardware all developed by Microsoft itself, a stark change in current operating procedures. Additionally, Microsoft is opening its first retail store in Canada, in direct competition to Apple, and a new version of Windows is also slated for imminent release.
This company has always been an innovator and although there may be little room to maneuver in a market that is already full of various tablets made by Apple and others utilizing the Android operating system, there's reason to believe that Microsoft - flush with cash and historic reputation - could start making a splash of its own in a new battlefield.
The fancy-dancy hype might be enough to bring in some new investor interest - especially with the note that Microsoft is entering the hardware business, too - but it'll be the earnings that tell the story, which should start leaving indicators early next year.
If Microsoft is as successful as giving the perception that its products are irrelevant just months after their release - and therefore consumers have to buy the next model - then Apple may have some competition. It looks like MSFT is producing a PR push these days, which makes it a stock to watch.
Facebook (FB): Another solid week came to a close for Facebook, with shares closing up by 10% on the week, but still far off from the much-hyped IPO price of $38. The acquisition bug continues to bite for this company with the most recently-announced deal being that of Face.com, whose facial-recognition technology could fit right in with the millions of photos being uploading to Facebook at any given time.
FB shares are up by 30% from the lows seen quickly following the IPO launch, but compared to earnings, it's still arguable that the company is still highly over-valued. The move higher quells many an investor fear, but it's still tough to consider this one more safe than risky, at least at this point.
The post-IPO drop and quick rebound keeps FB on the radar, though, but another retreat in earnings could send shares diving again.
Research In Motion (RIMM): It's earnings week for RIM.
The company is firing thousands of employees, has re-vamped its business model and rumors have it that the next strategic option is to split its messaging service from its handheld business. None of this compels anyone to believe that a rebound in share price is imminent, but it does leave the options open that some licensing revenue could materialize and buyout talk is again making its rounds, with potential suitors being Facebook, Microsoft or even Amazon (AMZN).
They buyout talk and earnings announcement is worth watching, but expect no surprises as the company has issued guidance that falls even below analyst estimates.
In positive news, a legal ruling allowed RIM to keep the BlackBerry trademark.
Healthcare, Biotech, Pharmaceutical:
Cytosorbents Corp (OTCQB:CTSO): Cytosorbents announced the official launch of CytoSorb in Germany last week, a move that coincided with the addition of Dr. Christian Steiner, MD, to the company as Vice President of Sales and Marketing and a Managing Director of its European sales subsidiary, CytoSorbents Europe GmbH.
According to accompanying press release, Dr. Steiner has already made an impact on the company and its growing potential in the blood purification sector:
Dr. Steiner, in an initial consultancy role, has already been instrumental in increasing awareness of CytoSorb amongst key opinion leaders during the controlled market release, and helping to establish the necessary selling infrastructure in Europe, including the recruitment of a core veteran sales team in Germany. Dr. Steiner's appointment, along with the hiring of 3 additional sales representatives -- one to start immediately with Dr. Steiner and two to start in August -- marks the official launch of CytoSorb in Germany.
CytoSorb was approved last year in Europe for the treatment of conditions where high cytokines are present. The company is also looking to license or partner its HemoDefend blood purification product and has also been awarded a U.S. Army grant.
With the official product launch in Germany under way, CTSO is a stock to watch. Although slow and methodical in the roll-out, this company is positioned to make a huge splash in treating hugely unmet medical needs - such as severe sepsis.
The current prices could end up being nothing but a huge buying opportunity, if early product results hold true through commercialization and additional trials. Of note, European regulators were convinced enough by the data they saw to approve before the at-the-time ongoing trial was completed.
Dr. Steiner has a resume full of established experience and contacts in the critical care arena in Germany and looks to build a solid foundation behind the commercial launch of CytoSorb.
Cel-Sci Corp (CVM): After spending a fair amount of time trading for above forty cents, shares of Cel-Sci Corp dipped again last week on the announcement of another stock offering that raised nearly six million dollars for the company.
Cel-Sci is currently investigating its lead product candidate, the head and neck cancer immunotherapy treatment Multikine, in a global Phase III trial and the newly-raised funds will, in part, help fund the completion of that trial.
For those looking for another potential Dendreon (DNDN) story, it could be worth keeping a keen eye on CVM during the coming months. The current market cap does not indicate an overwhelming amount of confidence on the part of investors for a potentially ground-breaking Phase III product, but any positive interim or final results from Multikine would most likely spark a round of buying that could easily place this stock in the realm of ten-bagger.
Trial updates have been few and far between from management, which will keep investors nervous, but the silence could also lead to more protracted price movement if something of relevance is released.
Still one to keep on the radar.
Spectrum Pharmaceuticals (SPPI): The huge short interest in Spectrum Pharmaceuticals has done little to hamper a share price run that had the SPPI stock close Friday at just below the $14 mark. Revenue for the company's primary money-maker, FUSILEV, have been steadily increasing and the generic competition that the shorts were counting on to negatively effect the SPPI share price has yet to materialize. Given the extended manufacturing delays behind bringing the generic competition back to market, many question whether the short argument that such an event is imminent is unfounded.
Meanwhile, Spectrum continues to post solid pipeline news that provides investors with an encouraging outlook even if FUSILEV sales do take a dip. The very, very hefty short interest will have SPPI on the biotech/pharmaceutical map for some time - at least until there is resolution about who is going to ultimately win this one. If the shorts are forced to cover in a hurry, then whoa boy, it could be a whopper of a price run.
Arena Pharmaceuticals (ARNA): After realizing quite the share price run over the past few weeks, Arena Pharmaceuticals sputtered on Friday while dropping by 15%. The dip should not be over-emphasized, however, as pullbacks are quite normal when stocks experience the quick run-ups that Arena did in such short periods of time.
It did not take long for the naysayers to start circulating stories about how the company may be over-valued or how the FDA was poised to delay a ruling on the company's weight-loss drug that is up for review.
The date for an FDA decision falls this week, so this is going to be a story to watch. Given the stark price increases over the past few weeks, it's hard to imagine that the best gains this stock has to enjoy - at least in terms of percentages - have already been realized; after all, ARNA is already a noted ten-bagger over the past 52-weeks.
In this fickle sector, though, you never quite know what to expect. It has become a common trend to see drug stocks drop immediately following an approval while others continue monumental rises that defy even the most enthusiastic price predictions.
Any dips on an approval delay may make an attractive entry or re-entry point for those following the story, but the hype surrounding this one lately makes ARNA a stock to watch, regardless.
Funny, with all the hype surrounding weight loss drugs these days, you have to wonder how much and FDA approval for good eating habits and exercise would be worth?
Siga Technologies (SIGA): Shares of Siga Technologies closed the week on a high note, up by five percent since rebounding after the announcement of a verdict appeal relating to a lawsuit filed - and won - by PharmAthene (PIP). Any SIGA upside will likely be limited to below four dollars until all the litigation is done, as PIP is due 50% of all profits for Siga's smallpox antiviral ST-246.
Still, those looking at the long-term could find SIGA an attractive buy for under three bucks, given the size and scope of the already-awarded BARDA contract.
Mannkind (MNKD): Mannkind is finally back over the two dollar mark after a late run last week. Shares closed higher by 4% on Friday on triple the average volume as investors absorbed clues that the company may take non-dilutive measures to raise cash later this year. Founder Al Mann already has a billion dollars invested in the company and may open the wallet again to keep dilution at a minimum.
Mannkind needs to complete additional trials for its inhaled insulin product, Afrezza, before having another go with the FDA. The trials are necessary because the company did not use the next-generation inhaler during the last round of Phase IIIs.
Titan Pharmaceuticals (OTCQB:TTNP): Chirp....chirp....chirp...that's the cricket sounds from management regarding Probuphine progress these days. As a result many investors have bailed out. TTNP shares rebounded - if you can call it that - to seventy cents late last week, but the right Probuphine or pipeline news could quickly send them back to the dollar mark. Right now, though, hardly anyone would notice since they're all asleep.