Chinese shares are lower this morning with the Shanghai Composite Index sinking at least 6% overnight and taking the market back to it’s recent lows. Poor manufacturing data out last week will not have helped and traders will be concerned of volatility spilling over into European and US markets today. With July’s FOMC meeting and GDP numbers to come, there are plenty of potential roadblocks ahead.

Here are this week’s picks:

Short-term reversal

Biogen Inc. $BIIB

The short-term reversal strategy looks to hold a selection of the poorest performing large cap stocks and attempts to profit from a reversion to the mean. This week’s selection goes to Biogen Inc. which sank 22% on Friday losing $20 billion in market value after the company reported a slowdown in sales and cut it’s earnings outlook.

Biogen is the third largest drug maker in the world and this was the stock’s largest one-day percentage drop since 2008. Traders should look for consolidation then play a rebound this week.

biogen inc stock chart

Marwood value

NeuStar Inc. $NSR

The Marwood Value Model picks out low rated stocks that should provide significant long term gains to value investors. This week’s pick goes to NeuStar Inc., a diversified technology and communications company with clients such as Lenovo, Forbes and Zappos.

NSR has plenty of cash and trades at just 8 x forward earnings with a PEG ratio of 0.88. The stock is also near an upward trend line which should offer some support this week.

NeuStar Inc stock chart stock pick

Short sellers

Exelixis Inc. $EXEL

Exelixis is a biotech stock that surged last week on steady volume taking the company to a total market cap of over $1 billion. Positive phase 3 trial data for its kidney cancer drug cabozantinib helped boost prospects among traders that the drug could get industry approval.

However, the rise will have some traders looking to book profits and there is a large gap to be filled down to the $4 level. The stock was also unable to close near its highs on Friday and sentiment on StockTwits has turned sharply negative.

exelixis stock chart



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