Tuesday, November 24, 2015

Arca Biopharma Inc (NASDAQ:ABIO)

Arca Biopharma Inc (NASDAQ:ABIO) broke out of a bottom/accumulation pattern today, as the stock closed up 47c or 8.94% on heavy volume, closing above the 50-day EMA for the first time in months. Today’s high is resistance for a follow through move on Tuesday. Looking at the technical chart above MACD and ADX both signal positive strength. The stock still trading above 9-day and 20-day exp moving average, also a bullish sign. Plus, the company will make a presentation at the 27th Annual Piper Jaffray Healthcare Conference on Tuesday, December 1 2015. I believe this conference on Wednesday could be a positive catalyst for ARCA biopharma shares.

Canadian Dollar and the Two-Year Rate Differential

The Canadian dollar is more than a petro currency.    It is also subject to the same forces of divergence that have lifted the US dollar more broadly.  Since the beginning of the year, the US two-year yield has risen 26 bp while Canada's two-year yield has fallen almost 39 bp.
The graph shows two time series.  The yellow line is the US dollar against the Canadian dollar.  The white line is the two-year yield spread. 
Earlier today the US dollar tested the multi-year high set in late-September just below CAD1.3460.  Today's high (according to Bloomberg) was about CAD1.3435.   The two-year yield spread reached a little more than 32.5 bp.   The multi-year high set in early August was a tenth of a basis point higher. 
Consider what has happened since the middle of October, when the recent moves began.  The US dollar traded a little below  CAD1.2835. It rallied six big figures in a little less than six weeks.  The two-year differential fell to a low below 3 bp on October 15.  It has risen 29 bp over the same period. 
Oil prices also fell during this period.  Note that the January 16 light sweet futures contract put in the recent high near $52 a barrel on October 10.  By October 15 it reached a low of almost $46.60.  It traded almost $40.40 today. 

The argument here is not that the price of oil does not impact the Canadian dollar.  It is that the flow of capital is larger than the flow of oil and that the Canadian dollar is subject to the same divergence force that is lifted the US dollar against most currencies. 

Avis Budget Group Inc. (NASDAQ: CAR)

Avis Budget Group, Inc., together with its subsidiaries, provides car and truck rentals, car sharing, and ancillary services to businesses and consumers worldwide. The company has three segments: North America, International, and Truck Rental. It operates the Avis car rental system with approximately 5,450 locations, that supply rental cars to the premium commercial and leisure segments of the travel industry; the Budget vehicle rental system with approximately 3,500 car rental locations, which serve the value-conscious segments of the industry; and Zipcar, a membership-based car sharing network that provides vehicles to approximately 915,000 members.
Take a look at the 1-year chart of Avis (NASDAQ: CAR) with the added notations:

CAR has been trading mostly sideways on top of a clear $40 support (green) during the most recent 4 months. Now that the stock appears to be testing that support level again, traders should be able to expect some sort of bounce. However, the stock’s recent dive is a bit concerning. If the $40 support were to break, lower prices should follow.

The Tale of the Tape: CAR has a key level of support at $40. A trader could enter a long position at $40 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.