Another day, another dollar, and another record high for the Dow Jones Industrial Average, which tacked on another 42-point gain yesterday, to bring the index to its highest levels ever. Fueled by cheap, easy money, traders can thank the inflationary policies of Fed Chairman Ben Bernanke for bringing the stock market out of the doldrums of the recession. The rest of the economy, not so much. GDP growth is still anemic, and the Congressional Budget Office believes as many as 700,000 jobs could be lost in the months ahead, as sequestration wends its way through the economy.
The three stocks below, however, had their own causes to celebrate; but resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know why their stock surged, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.
|Vical Incorporate (NASDAQ:VICL)||15.4%|
|magicJack VocalTec Ltd (NASDAQ:CALL)||12.5%|
|Diamond Foods, Inc. (NASDAQ:DMND)||9%|
Conference call There was no company-specific news to account for the jump in Vical Incorporated (NASDAQ:VICL)'s stock, but management did give a presentation at a health-care conference yesterday morning, so perhaps someone liked what they heard. Or maybe they were anticipating someone hearing something they liked, because, while the price rose throughout the day yesterday, it really spiked at the end of the trading session.
Yet, there didn't seem to be any follow through after the markets closed. No big announcements. No additional clarity. Not surprisingly, the stock has pulled back in early morning trading today, and is down about 5% now.
The biotech focuses on vaccines and gene therapies, and Vical expects to announce sometime this year results from a phase 3 study of its metastatic melanoma treatment Allovectin, a drug it estimates has a market opportunity of more than $500 million annually. It believes the therapy offers many benefits to Bristol Myers Squibb Co. (NYSE:BMY)'s leading treatment Yervoy, such as being able to be given in an outpatient setting, and having a better safety profile.
With another conference due in less than two weeks, perhaps Vical Incorporated (NASDAQ:VICL) will reprise its performance there, though the real test comes from its clinical trial results.
Opportunity still calling? Internet phone service specialist magicJack VocalTec also spiked for no discernable reason; but, after plowing the stock down 59% from its 52-week high, to $11 a share, perhaps the short-sellers are closing up shop, and fueling a bit of a squeeze play. The most recent data shows the number of sales sold short dipped ever so slightly, to 4.8 million shares, equating to a short interest ratio of more than 17 days to cover. That's the number of days it would take to completely "cover" all the short position (i.e., buy back all the shares sold short). The Motley Fool thinks anything over seven days is a lot, so situations like this can serve to feed on itself.