U.S. Markets close in 6 hrs 21 mins

PreMarket Prep: A Biotech Surprise, Stamps Shorts Take A Licking, Debating McDonald's Earnings Move

Joel Elconin

Two major new stories dominated Tuesday's PreMarket Prep Show, and for good reason.

The top story: Biogen (NASDAQ: BIIB) pulled a fast one on investors who threw in the towel on the company based on the March news that it had discontinued trials for its Alzheimer's drug aducanumab.

The other story: Stamps.com (NASDAQ: STMP) reported a new collaboration with United Parcel Service (NYSE: UPS) to provide its customer base with specially discounted UPS shipping rates.

Wasn't Alzheimer's Study Discontinued In March? 

Before the open, Biogen announced a third-quarter EPS and sales beat — and its plans for a regulatory filing for aducanumab following new analysis.

The company said its Phase 3 EMERGE study met its primary endpoint, and Biogen is now confident that a subset of patients in the trial study support the EMERGE findings. 

Since the issue has had several whipsaws off the news regarding this drug, the PreMarket Prep co-hosts viewed the spike as a selling opportunity for a few different reasons.

First, and most importantly, there is no guarantee the drug will be approved by the FDA and brought to the market.

When the issue has spiked on aducanumab in the past, it has faded over the long-term. 

The stock peaked well ahead of the premarket high of $328 off the open at $318 and descended to $279.16. 

The stock was trading 27.46% higher at $284.90 shortly before the close Tuesday. 

Stamps.com Attempts To Reach Triple Digits

Perhaps no other issue has had as rough of a time since mid-2018 than Stamps.com.

After peaking in June 2018 at $285.75, the issue went into a freefall after terminating its relationship with the U.S. Postal Service and a few bad earnings reports. 

The bloodletting did not end until May of this year, when it bottomed at $32.54. It had been on a solid rebound, more than doubling at Monday's close of $76.13.

Tuesday's announcement that Stamps.com has formed a relationship with UPS to offer its customer base specially discounted UPS shipping rates has the issue firmly in the green.

After reaching the psychological resistance level of $100 during premarket trading, investors listening to PreMarket Prep who were long the issue were alerted it may have had a hard time revisiting that level.

The reason: it had already backed off that level and was finding sellers well head of it during the show.

The stock was trading 18.68% higher at $90.35 at the time of publication. 

Disagreement On Future McDonald's Price Action After Q3 Miss

Before the open, McDonald's (NYSE: MCD) announced a third-quarter miss for EPS and sales.

PreMarket Prep co-host Dennis Dick was ready to by the dip off the open, banking on McDonald's long-term uptrend being tested before resuming.

The author of this article said the chart was broken in the issue and was confident McDonald's had more to do on the downside.

As a result, a lunch bet was made, with Dick winning the wager iff the issue reached $216, and this author making paydirt if it traded down to $191 before that. 

As it turns out, seller engulfed the issue off the opening bell and it is approaching the $200 level.

The stock was down 4.55% at $200.30 at the time of publication. 

Temple Joins Wednesday 

Midway through Tuesday's show, Nic Chahine, the author of "Create Income With Spreads," joined the broadcast and provided commentary on a number of issues requested by our listening audience.

Wednesday's guest will be Chris Temple of the National Investor, who will share macroeconomic outlook on the U.S. stock markets, interest rates and precious metals.

PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET here. The replay can be found on Benzinga's YouTube channel, and the podcast is on iTunesGoogle Play, Soundcloud, Stitcher and Tunein.

Related Links: 

PreMarket Prep: Schizophrenic Drug Stocks, A Technical Play On Halliburton's Q3 Report

PreMarket Prep Recap: Charting Gildan's Plunge, Buying E-Trade Off The Q3 Print

Photo by Bryan Hong via Wikimedia. 

See more from Benzinga

© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.