The bull was not able to maintain the upward momentum from the last two weeks but all is not lost just yet. There are still support at the SPY $181.92 level and the bull can still fight off the bear momentum before the support is being tested once again.
Considered the strong bounce from two weeks ago and a follow-up up week afterward, a correction is not unexpected.
$DMRC continued to correct and this is unavoidable due to the severe breakdown of Nasdaq in the week. Meanwhile, there are strong supports from the 79 & 89 MA lines in the weekly chart:
Notice the 79 & 89 weekly MA lines at the $30 level.
However, I suspect there are a lot of eager investors (retail and institutions) looking to build a position in $DMRC waiting for lower price. How did I get my suspicion? Take a look at the $DMRC chart (5m chart from Feb 1 to Feb 5) below and compare to the Nasdaq Composite Index chart of similar time-frame below:
Notice that bounces on the $DMRC 5m chart (highlighted by yellow circles) were more significant than any of the Nasdaq bounces in the similar time-frame. Not to mention that the overall trend on the Nasdaq was predominantly down while the $DMRC only reflected the downward bias on the second half of the week.
The way I see it, giving the nature of low float, $DMRC investors are looking for corrections to build positions without raising their average cost level. Let’s say if I want my average cost to be less than $35 for a 10,000 shares lot, I would not want to start bidding at $35, I would wait until price drop to around $32-$33 before buying. This way, even if my buying will bid the price up, I would still be able to buy my lot below $35 in a down market. However, in a regular non-bearish market, even a 10,000 lot can bid the price up by $3-4 buck rather quickly.
Of course, there are two selling forces in play here- the short-sellers eager to break this stock down and the existing short-term traders who are long looking to get out at breakeven or minimizing losses. The short-sellers biggest Achilles heel is that in order to lock in gain, they have to BUY back their shares. Unless they cover in the bearish momentum which is the ONLY best way to cover without driving price back up too quickly, they represent a huge buying force to move the stock back up quickly in a regular bullish market. Thus, any failure of the short-sellers to cover this week will be the fire-power for this stock to bounce back furiously when further news of adoption come into play.
The January bounce based on news leading to the NRF 2016 Big Retail Show is a testament that $DMRC could rise despite a falling general market if there are continuing fundamental news coming out to support further adoption of the Digimarc invisible Digital Watermark (DW) which is wholeheartedly support by GS1, the father of UPC barcode.
Thus, at this juncture of bearish attack, investors need to remember Warren Buffet’s wisdom:
“With a wonderful business, you can figure out what will happen; you can’t figure out when it will happen. You don’t want to focus on when, you want to focus on what. If you’re right about what, you don’t have to worry about when”
In the long run, if the long investors are right about the future of Digimarc barcode being the global standard in “presenting” the UPC barcode in all packaging, price will eventually rise accordingly.
$ARTH was able to hold the fort despite another biotech down week.
So far so good while waiting for human trial result.
$BIOC however did even better by breaking out to the upside with a gain of 7.75% for the week despite another biotech meltdown week!
We may just be seeing a potential bottom here.
$IBIO also did good with a gain of 1.67% for the week.
Despite a red bar for the week, it is still an up week bar.
$RBYCF is the biggest surprise for the week, it is still ALIVE!
Being a gold mining stock, it went up for the week due to rising tide of gold price.
I’m very fortunate to see my biotech holding well despite the continuing biotech meltdown. This shows my undevalued biotech picks are still in the growing mode.
My 2 cents.
From my camera (click on photo to see image at 100%)