Small Caps Can Continue to Rally But Needs Deal Flow…Update-3

Licensing and M&A Through the JPM  Meeting in Early January 2024 Should  Support Gains

Update-3 12/22 ,,,Added Catalyst (Pharmaceuticals (CPRX)at 16+, is focused on rare neurological and epileptic diseases.

• Karuna Therapeutics (KRTX) up 47% to $316 handle on Bristol Myers (BMY) $14B buyout another neuroscience deal.
• XBI and ARKG both showing strength. MRNA up 4.5% approaching $100.
• US Inflation decelerating with PCE rising only 3.2%.

Update-2 12/21…2:30p EST…Slightly off highs but volatility makes them hard to trade. Expecting traction from JPM announcements in early January. CRSP weakening. PFE call options working. ARKG and XBI up over 2%.

Update-1 12/19… at close..I had to post quickly this AM as I saw momentum developing and wanted to give signals for traders before we left the office .Just to summarize our end of Year 2023 playbook is Small Cap Momentum and we provided a list (Below) that represents many of these trades. After a very brief pause these stocks are gaining velocity again today and we tried to focus on major bellwether ETFs of this small cap trade like ARKG XBI within biotechs and IWM, IJR in the general market. But as we move through this rally which we expect to run through mid-January we would like to pick life science stocks that have longer term potential throughout 2024.

One trend we noticed recently was the momentum in genomics stocks and how this would be a good entry point for Illumina (ILMN) which was a multi-year low caused by the GRAIL deal. We also saw an emerging  opportunity with other genomics stocks like 10X Genomics (TXG) and Twist Bioscience (TWST). These are unique companies with strong capabilities but are hard to value from financial metrics.

So we have a number of thematic plays in biotech like genomics, cell therapy and gene editing and recently neuroscience  that provides the template for new stock picks and you see this again today for big movers: CRBU, CRSP, CYRX, GERN, PACB,SUPN etc. So over the next few weeks we hope to refine these picks for longer term appreciation.

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Small Cap Biotech Trades-December 19 in Early Trading Looking Good.

• XBI up 1.99% to $86
• ARKG up 3.36% to $31.65
• Green Screen in SMIDs below
• ILMN new long up 2.7% to $132.59
• IJR and IWM up more than 1%.
• CYRX,TWST, PACB even GERN? up

Update later in am. But a bit frothy.

NEW speculative option trade: PFE $27 calls.