I believe the bear had used up its last battery for their recent campaign. On the hourly $SPY chart below, there was a doji formation right at the support uptrend line (see circle highlight). The following two green up bars confirmed the potential bottom here.
Likewise, the daily chart below showed a long-shadow (below body) candlestick bar that confirmed the bull resolve to reclaim its authority. However, to really confirm a bounce from here, price needs to take out the high of today bar next week..
On the weekly chart below, price bounced off the uptrend line and is considered an inside week compared to previous week bar.
Giving the above setup, I’m placing a higher probability of a market bounce next week. To back up my projection, I bought some SP500 emini call options after I saw the hourly doji bar formation.
This was a bad week for my port. Due to $LRAD not winning the Middle East city large order, some investors didn’t want to hold and I wasn’t surprised. When the bids were there, I started to hit them to cut losses and moved fund to other positions with better prospect. The lumpy sales and hollow promises of the future sales were beginning to smell like dead money and I just couldn’t hold too large a position for ego stake. I cannot compound the unfortunate turn of event (lost the Middle East deal) into a mistake on my part by staying in a stock that I know could be dead money. It is always better to cut losses (no matter how small or large) and move cash to other positions with better prospect than to “wait” for a comeback that may take longer than expected.. Although the losses was quite large, it was an acceptable part of what I’m doing when the wind doesn’t shift my way in the swing-for-the fence style of trading. Remember, I don’t need all my positions to hit the rocket launch, I just need a few so that the big wins will more than cover the expected losses. This week is just a set back which I know I can get back up and continue on.
Today weekly chart did not look good. If price failed to bounce from a spinning top at support, then the bull lost and the bear continued on. After today selling, I’m holding only 1/4 of my original size.
$AMRN came back to my radar when the judge granted Amarin the injunction against the FDA from bringing criminal charge for misbranding violation if Amarin initiated discussion using truth and non-misleading information to the doctors. The judge also cited the previous Caronia decision which the FDA conveniently read it so narrowly that it basically ignored the essence of its decision. Although the FDA can appeal the injunction, I don’t think it will win. To allow FDA to win on appeal will mean to allow the FDA to bend the 1st Amendment rule to fit its agenda. The 1st Amendment Right is the foundation of what free democracy is all about and is non-negotiable. This sacred right is defended and protected by the Supreme Court. Thus, I don’t see how FDA can win the appeal. Remember, the FDA did not contest the Caronia decision but instead chose to read the decision narrowly. The judge decision in Amarin lawsuit is simply to tell the FDA to acknowledge the Caronia decision in its entirety.
Thus, having heard the decision, I began to buy back $AMRN after the halt. The problem with Vascepa script not growing as fast as it should was because of Amarin inability to communicate to the doctors that Vascepa can reduce trig level without raising the bad LDL while the generic and Lovaza have enough DHA to raise bad LDL. There are also plenty of positive peer reviews Amarin can show the doctors without having the doctors asking for them. This preemptive education can help Amarin steal script shares from generic and it is from this belief that I bought back in $AMRN. Currently, $AMRN is my largest position replacing $LRAD. I’ve also reduced position size on $BIOC and $AKAO to fund the $AMRN purchase.
The weekly chart above is a giant spinning top candlestick bar. Per my conviction, price will start to trend up when the script numbers begin to reflect the growth.
With the available cash from sales of $LRAD, I also added to $DMRC. $DMRC and $LRAD are the only tech stocks in my port that are not biotech. With $LRAD setback, I’m shifting some fund to $DMRC.
$DMRC had a small give back for the week but it was of low volume and small range. If the general market bounces next week, I expect $DMRC to bounce as well.
$BIOC continued downdraft was quite disturbing. I had no choice but to cut losses for half of position. Proceeds also went to buy $AMRN. Yeah, I “could” have sold it during the run-up two days ago but that is the way the ball rolls in stock trading. It is always easier to use hindsight to beat yourself up; but I chose to make decision based on current events and not dwell on past decisions. Noticed I said past “decision” not “mistake”. It only “looks” like mistake when you use hindsight as the shining light.
Currently, price is now at $2.22 support area. Monday earnings will determine if this is going lower or bounce back higher.
$AKAO finally closed below $7 for the first time after two weeks.
Price is now at support. Let’s see if this will bounce next week to get back above $7.
$ONCY also took a dip for the week.
I like to see the support at $0.54 hold.
$ARTH was not immune to the general downdraft this week.
Price closed at the weekly 5 MA support which is good. I’m going to wait and hold this for the human trial. I’m not going to let the past $LNG mistake came back to bite me twice.
Needless to say, the large drop together with my big size in $LRAD took my port for a 7.4% hair-cut for the day. YTD losses is now at 10.7%.
Main port: AMRN, DMRC, AKAO, ONCY, BIOC, LRAD and 5.3% cash. Trading port: ARTH (up 38%).
My 2 cents.
Categories: Daily trading Journal