Top-4 stocks on our Holiday Hotlist 🔥

The stock market will be closed on Monday to celebrate the Christmas holiday. I’ll be back with another premarket report on Tuesday.

Merry Christmas, everybody! 🎄

Now, let's get ready to trade!

Stocks returned to form on Thursday after a hiccup in the previous session. The small-cap Russell 2K was one of the trading day’s top performers.

Futures are holding steady in early trading. S&P 500 contracts are currently flat, and Dow contracts are down by nearly 0.3%.

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🎮 Chinese Tech Slumps Amid New Gaming Regulations

In its latest move to curve the harmful effects of video games, Beijing has issued new draft regulations to limit the time and money spent on online gaming.

The move has revived investor concerns dating back to the 2021 restrictions on minors’ gaming time, and it’s the next step in China’s ongoing gaming industry crackdown that began in late 2020.

📉 U.S.-Listed Chinese Tech Under Strain:
With the announcement of these new regulations, U.S.-listed Chinese technology stocks and related exchange-traded funds are expected to face downturns.

KraneShares CSI China Internet ETF (KWEB): This ETF saw a significant premarket drop, falling over 6%.

American depositary receipts for major Chinese tech firms like Alibaba [BABA], Baidu [BIDU], and Bilibili [BILI] all experienced declines prior to the market opening.

🔍 Broader Implications:
These regulatory measures and their impact on stock prices underscore the ongoing challenges faced by the Chinese tech sector in navigating the regulatory environment.

Ansys [ANSS] - Last Close: $303.16

The software engineering giant is reportedly considering a sale amid a spike in takeover interest, according to an exclusive report from Bloomberg News.

The article quoted unnamed insiders who claimed the company is currently working with advisors and weighing its options.

No final decision has been reached on whether to sell the company, but sources say Ansys is testing the waters.

ANSS is leading the S&P 500 with a whopping 20.7% gain on nearly 50K shares traded.

My Take: It looks like the market is buying the rumor here. ANSS has price support at $350, $320, and $300, and today’s rally could put it into a new trading range.

Karuna Therapeutics [KRTX] - Last Close: $215.19

In today’s blockbuster Big Pharma deal, Bristol-Myers Squibb [BMY] has agreed to purchase this tiny biotech in a $14 billion all-cash deal.

Under the agreement, KRTX investors will receive $330 per share in cash, representing a 53% premium from its last closing price.

The transaction is expected to close sometime in Q1 2024, pending approval by shareholders, regulators, and customary closing conditions.

KRTX is up 47.8% on nearly 300K shares traded in the premarket.

My Take: KRTX is currently trading for $318, so there’s still a teeny bit of upside left between here and the acquisition price of $330. However, the downside risks could outweigh the potential reward.

Royalty Management [RMCO] - Last Close: $1.99

This stock is making a huge move ahead of today’s opening bell thanks to an announcement from on of its subsidiaries, Ferrox Holdings.

This morning, Ferrox announced it has commenced production of titanium ferrite from its Tivani operating site in South Africa.

Ferrox CEO Terry Duffy called it an “exciting moment” and said his team was relieved to hit this milestone before the New Year.

RMCO is up 119.6%, and over 10.5 million shares have changed hands in the pre-bell trading session.

My Take: I don’t trust this move. RMCO has a really small share float so this rally could be anything more than a Reddit-esque flash in the plan. Watch out for a pullback.

LumiraDX [LMDX] - Last Close: $0.0767

On Wednesday, a Form SC 13D/A filing revealed angel investor Willard Umphrey had taken a 15% stake in the struggling biotech.

According to the filing, Umphrey, a well known fund manager with an impressive collection of credentials, has acquired more than 23 million shares of LMDX.

There’s no word on what Mr. Umphrey has planned for LumiraDX just yet, but shares are getting a boost from the Smart Money interest.

LMDX is is a top mover with a 31.2% gain on more than 10.3 million shares traded.

UPDATE: This gain has suddenly collapsed ahead of publishing. LMDX is now up by only 7.1%.

My Take: The Smart Money’s interest in LMDX could be a sign that something big is brewing, but it could also end up being a big ‘nothing burger.’ I would stay away from this one.

Gainers

Decliners