9:05am (EST)
The market got off to a good start for 2010 as the Dow rallied 155 points to close at 10,583. In the process, the index made a 52-week high and was followed by strong gains in the Nasdaq (up 39 points to 2,308) and the S&P 500 (up 18 to 1,132).
The bulls got all the ammo they needed after a strong start as the ISM Manufacturing Index for December exceeded Wall Street’s forecast of 54.3 by improving to 55.9. This was up from 53.6 in November and helped keep the bulls in a buying mood.
Other economic news showed construction spending dropped slightly by 0.6% for November; Wall Street was looking for a 0.5% decline.
Elsewhere, oil prices jumped 3% yesterday to $81.50/ barrel and broke $80 for the first time since November. Gold was up $3.30 to $1,121 an ounce while Platinum surged $57 to $1,509. We normally don’t follow Platinum but we were curious.
There were also other juicy stories unfolding in the market yesterday.
One stock which we have followed for years is starting to show tremendous volatility again. Rambus (RMBS, $23.23, down $1.17) was all over the map and went on a wild ride after our 1pm update on Monday.
The stock opened at $24.80 after closing at $24.40 last Thursday. Then, shortly after 1pm, shares tanked to a low of $16. We weren’t sure of why the reversal was happening but we knew it was litigation news.
Rambus has an antitrust case against several memory chip companies that is scheduled to go to trial on this Friday. We won’t rehash the entire litigation history but you can research some of our past articles on the company from our archives. One thing for sure…the stock will be in focus in the coming days and weeks.
Another stock we are watching for future profits down the road is Vivus (VVUS, $9.44, up $0.24).
The company has a potential blockbuster drug with Qnexa, a treatment for obesity that will be available in early 2010. The company said two late-stage clinical trials went well and asked regulators to approve its drug a week ago.
Vivus has some competition as other “diet’ pills are also expected to debut. Arena Pharmaceuticals (ARNA, $3.52, down $0.03) has also asked the FDA to take a look at their obesity drug, Lorcaserin, while Orexigen Therapeutics (OREX, $7.12, down $0.32) is pushing Contrave by the first half of 2010.
Vivus is the best bet to capture this lucrative market as Wall Street believes Qnexa could be the top go-getter based on the weight loss observed in clinical testing.
Arena’s weight loss drug is safer but Qnexa is also being used in Phase 2 trials to treat diabetes. Talk about two-for-the-money…imagine the cost savings of having the luxury to manufacture one drug to do two things.
It doesn’t stop there either. Vivus also has a drug, Avanafil, which is in phase 3 trials to treat erectile dysfunction and Luramist which is in phase 2 studies for the treatment of hypoactive sexual desire disorder in women.
The 52-week high for Vivus is $12.88 which was hit on September 10, 2009. We think the stock challenges this level again so file this one away. There will be a trade down the road…
As we head to press, Dow futures are slightly lower by a point but have been in positive territory. Current subscribers, check the Members Area for the trade updates and possibly a NEW trade.
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