freefdawatchlist's  Instablog

Arena Pharmaceuticals, Inc (Nasdaq: ARNA) has rallied $7.45 or (454%) in last 3 month. FDA will make decision on Lorcaserin (weight management) drug. US Food and Drug Administration (FDA) Endocrinologic and Metabolic Drugs Advisory Committee voted 18 to 4 in favor of Lorcaserin. Although advisory committees provide recommendations to the FDA, the agency makes the final decisions. VVIUS Inc (Nasdaq:VVUS), and Orexigen Therapeutics, Inc. (Nasdaq: OREX) are other two company waiting to get approval. Fda will take decision VVUS drug Qnexa on July 17th. Whichever company gets first Fda approval will be winner. So, if ARNA gets the approval, it will bad news for VVUS and OREX and vice versa.

ARNA has following drugs in trial phase:

• Lorcaserin (weight management) Resubmitted NDA
• APD811 (pulmonary arterial hypertension) Phase 1
• APD334 (autoimmune diseases) Preclinical
• APD371 (pain) Preclinical
• GPR119 agonists (type 2 diabetes) Research

Arena made a deal with Japan's Eisai company for Lorcaserin. Arena will receive an upfront payment of $50 million from Japan's Eisai company and up to another $90 million in milestone payments for U.S. approval and delivery of the product for sale. Also under agreement, Arena will receive 31.5% on the net sale from Eisai and 36.5% on the portion that exceeds $ 750 million.

At present, Arena has market cap of 1.8 B. Based on the 1st quarterly result, Arena had $ 88 million in cash, out of which $7 million per quarter it has to pay back as loan interest. Arena reported first quarter loss of $ 29.4 million. This is end of second quarter. With 4 drug in early stage, I think Arena cannot survive more then two quarter unless Lorcaserin is approved. As you know, for any drug to get final fda approval takes long time and to generate any revenue from an approved drug take additional 3-6 month.

(click to enlarge)

Steps involved for Fda approval.

Past performance of ARNA in last 5 year

Bearish call on ARNA after 456% rally in 3 month.

http://www.freefdawatchlist.com/2012/06/get-ready-for-roller-coaster-ride-with.html

It'll be 18th Eu summit in last 2 year on June 28- 29th and so far Euro zone countries haven't done much to save euro. Stock market have rallied on the false promises made on the last day of summit. On Thursday, US, UK, Germany, France, and other Eurozone countries will announce weak GDP. Now the question remains, whether the market will sell off on bad data or will it rally on the hope of easing. Next, FOMC meeting is on August 1st, so if Euro zone minister doesn't announce easing or bond buying program, there could be sell off. At the same time, there are huge shorts position in Euro. If any false promises is made at the end of summit, there could be huge short squeeze in euro and this market could take off to new highs.

Trading Strategies For June 26th:

ECB will be carrying out fine tuning operation tomorrow and because of this, 90% of the time Dow and S&P500 have opened higher or rallied. It also provided cushion for any negative news.
Based on the chart, market should open low, and it should sell off unless there is rumor out of Europe.

For Bullish sentiment to continue: Dow needs to break 12525, while S&P500 needs to break 1318.

For Bearish sentiment to continue: Dow needs to break 12469, while S&P500 needs to break 1312 followed by 1308

SPX chart

Dow Jones Industrial Average is expected to open higher as ECB is carrying fine tuning operation or else based on the chart. it should have opened low.

Dow at key resistance level 12,509

In Forex Currency trading, Eur/Usd is at 1.2518 (+0.14%), Usd/Cad is at 1.0274 (-0.17%) and Aud/Usd is at 1.0031 (+0.26%). US dollar Currency Index is at 82.36(-0.13%)

CBOE Volatility Index VIX up 12.53% at 20.38

GOLD is at 1585 (-3.80)

SILVER is at 27.41 (-0.11)

Earning Before Market open: LDK ($1.14 eps estimate, prev year eps $0.95)
RBN ( prev year eps $0.53), WH

Earnings After market Close:AVAV($0.72 eps estimate, prev year eps $0.79), HRB ($2.05 eps estimate, prev year eps $2.14), KEQU, ZZ, TIGR, ZZ ($0 eps estimate, prev year eps $0.01)

After hours big gainer: POZN, APOL, STX, ARAY, HMA, FOE, MNI

After hours big loser: CADX, CSTR, TSLA, SPPI, HRG, BPZ

Stocks for Day trading: UVXY, XIV, SVXY, TVIX, GLD, TZA, FAS, FAZ, GMCR, NOK, PCX, WLT, ACI, HAL, MT, X, FSLR

Stocks for Option Trading: CAT, XOM, SPY, QQQ, IBM, PCLN, AAPl, WLT, PCX, GOOG, MT.

Upcoming FDA approval : QRX on June 25th and ARNA on June 27th.

Economic calendar:

Forex Currency event:
US CB Consumer Confidence: Tuesday, 14:00. U.S. consumer confidence declined unexpectedly in May to 64.9 from 68.7 in April while analysts expected the index reach 70.0. The current economic conditions and the short-term outlook were the main cause for this drop. A small decline to 64.0 is forecasted.

Washington Event:

President Barack Obama attends fundraisers in Florida.

10 a.m.: Hearing on empowering and protecting current members of the military and veterans in the consumer financial marketplace, at the Senate Banking Committee.

Euro Zone Debt Crisis Event:

June 28/29 - Summit of EU heads of state and government in Brussels: leaders to consider plans for greater euro zone integration jointly drawn up by EU Commission President Jose

Manuel Barroso, ECB President Mario Draghi, Eurogroup Chairman Jean-Claude Juncker and EU Council President Herman Van Rompuy.To be followed by meeting of euro zone leaders.

Other Charts to watch:

CAT

TVIX

UVXY

For the week Dow was down 127 point or (-1%), S&P500 was down 8 point (-0.58%), AAPL was up $8, GOOG was up $10, GLD was down $5, AGQ was down $5, UVXY was down $4.55, TNA was up $1.49, TZA was down $0.32, ERX was down $3.73, ERY was up $0.69, FAS was up $0.37 and FAZ was down $0.32

Lets analyse Dow Jones Industrial Average (DJIA) chart:

Based on the chart Dow is expected to open lower on Monday. The stock closed in bullish zone but trend was downward at the close. If Dow is able to break 12, 734 its going higher, and If dow breaks 12,507 its going lower. Overall I am expecting 100 point movement upside and 300 point movement downside.

Dow Bi weekly chart

DJIA 3 month chart

DJIA 6 month chart

Lets analyse S&P500 (SPX) chart:

Based on the chart SPX is expected to open lower on Monday. The stock closed in bullish zone but trend was downward at the close. If SPX is able to break 1344 its going higher, and If dow breaks 1322 its going lower. Overall I am expecting 30 point movement upside and downside.

Lets analyse VIX, TVIX and UVXY

: Remember VIX is in contango, so any rally in VIX is not sustainable. You can make money from, UVXY, TVIX, XIV on daily basis. Don't use it as a long term investment tool. This are very risky stock especially in election year. I am expecting bounce back in UVXY, and TVIX.

Lets analyse Gold (GLD) and (AGQ)Silver ETF:

Without inflation or without easing, Gold and silver are likely to sell off.

Short term trend in GLD is like 2008 crash

There is more downside in AGQ.

Forex Currency Trading

:

Eur/USD is looking bearish at the moment and if it is able to break 1.2750, then its going above 1.30 But if Eur/usd breaks 1.25, it will test 1.2250