Post Excessive Sell-Off, September Is Still In The Wind

by: Henry McCusker

Prognosis for the week: Light volumes, most selling into strengths, in an aggregate market that is trending “manically” on soft data. Investors are under-invested, having factored in so much uncertainty and questions of sentiment, forcing the VIX to keep dropping. Good cheap stocks include Athersys (NASDAQ:ATHX), NeoStem (NBS), Osiris (NASDAQ:OSIR), Cytori (NASDAQ:CYTX) and Geron (NASDAQ:GERN) … a lot of investors are nibbling (buying) on dips … slow and sure … keeping the shorts away! In this sustained soft patch, there is still NO consensus of OPINION … so, just keep NIBBLING! It still concerns me concerning those companies that EXPECT to finance by the end of the year [Aastrom Biosciences (ASTM), Stem Cells (STEMD) and a few others]!

The stock market is a forward-looking mechanism and part of the reason for stocks’ swoon this summer I believe was due to the markets re-pricing equities to better reflect expectations. My assessment may not be finalized, expect a risk-on RALLY … I see a … LOT of opportunity as long as there is a … slow migration to new highs.

September has been the worst-performing month of the year for the Dow and the S&P 500 since 1950. Historically, NASDAQ stocks typically haven’t fared well in September either. So it may be awhile before buyer’s “spy” a bit of sunlight in blue skies (now that is rhetorical). The market is starting to move but Labor Day approaches.

We all know growth is tepid; unemployment is a bear and housing stinks. Major Wall Streetfirms, the IMF and, the Federal Reserve all have slashed their estimates for U.S. GDP growth this year. Federal Chairman Bernanke does NOT see an immediate need for a 3rd round of quantitative easing.

Starting the day: Stock-index futures added to their gains, after data showed personal income rose by 0.3% last month and personal spending increased by 0.8%. Stocks opened higher on Monday, 8/29/11. The Dow opened 163.32 points (1.46%) higher to 11,499.86. The S&P gained 18.65 points (1.77%) to 1,195.45. The NASDAQ added 40.05 points (2.08%) to 2,519.90.

Mid-day the NASDAQ is now UP +69.24(+2.79%) to 2,549.09. The Dow is still UP +215.47 (+1.91%) to 11,500.01. The DOW is approaching 12,000 but back above 11,000.

Mid-Day Movers … Aastrom, Athersys, BioMimetic (NASDAQ:BMTI), Cytori, Geron, NeoStem, Neuralstem (NYSEMKT:CUR), Opexa (OPXA), Osiris, Pluristem (NASDAQ:PSTI), ReNeuron (OTCPK:RNUGF) and ThermoGenesis (NASDAQ:KOOL)

What’s new in the regenerative medicine/stem cell market …

FDA allows Dendreon to produce Provenge at Atlanta plant: Dendreon (NASDAQ:DNDN) gained FDA approval to manufacture prostate cancer drug Provenge at a facility in Atlanta. Factories in Los Angeles and New Jersey already were approved. The bottom line, reimbursement has been approved, let’s watch pricing evolve downward.

The Texas Medical Board is seeking to put restrictions on stem cell transplants: The rule, proposed Friday, classifies stem cell transplants as a medical practice that can only be done by physicians. The rule further stipulates that doctors who use stem cells for treatment would have to abide by all state and federal laws pertaining to their use, as well as have an accredited, hospital-based or academic establishment review board approve plans for their use. The bottom Line, although the rule is clearly aimed at the use of stem cells, it was written broadly enough to include other experimental products. It would not cover the use of FDA approved medication for treatments other than their intended use.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.