Weekly thought on $AKER, $AMRN, $CARA, $CERS, $DMRC, $IBIO, $INFN, $MTCH, $SEED

Just when the bear thought they finally got an upper hand on the first two days of the week with a scary looking “falling-off-the-cliff” Tuesday down day, the bear got a tab on its shoulder…

“What the heck are you doing here?”

Before the bear could turn around to see who was asking…

Boom!

The bear was no more.

SP-500_Daily

By Friday, there is no question that the bull is very much alive and kicking!

My port also staged a late week recovery as well.  In fact, there was a “surprised” Black Friday special offer that I simply could not resist.  As a result, I now own more than a handful of stock. Eight to be exact. While eight isn’t a lot for many of you, it is quite a lot to me.  I guess my port allocation strategy has evolved a bit as well.

Let me explain…

Over the years, there were other stocks that I’ve swung for the fences.  One of them was $DMRC.  Just because I stopped trading it doesn’t mean I’m no longer interested.  In fact, I’ve been watching it for a long time.  Digimarc was a stock that I couldn’t trade successfully and it was entirely my own doing.  I had plenty of chance to lock in profit and I didn’t ’cause I was too wrapped up with the long-term prospect.  The most recent mishap was that I was deep in profit when $DMRC rallied hard in January due to the stellar progresses in gaining acceptance by the retail industry of its Digimarc barcode in the 2016 Big Retail show.  At the time, it was also one of my largest position.  Price soared close to $45 from my mid-$30ish cost basis and I didn’t take profit.  It was this singular event that prompted me to start taking profit on all quick gains I made this year.  Hence my improvement in my YTD gain so far.

Since my net result on Digimarc was a loss, I decided to take a break from it awhile while I pursued other possible runner candidates.  Meanwhile Digimarc continues to gain industry attention.  Recently, a group of industry-leading companies in Japan formed a study group regarding the implementation of Digimarc Barcode.  Now, how can I ignore this news and still stay on the sideline?

I couldn’t but I also didn’t want to chase the price either.  I was in a dilemma and was hoping for a correction to allow me to get buy back some $DMRC.  Lo and behold, the Stock God heard my calling and Friday was the answer.  Thanks goodness some of my three-days settlement lock-up cash freed up on Friday and I was able to buy back some $DMRC not long after the open.  Out of the blue, Digimarc diluted with a secondary offering at $30!  What’s a pleasant surprise.  I got in at $32ish.

DMRC_weekly

From the weekly chart above, the sell-off bounced off from a multitude of supports- 50% Fibonacci retracement, 79 & 89 MA supports as well as the 15 MA support.  What even amazing is that $DMRC closed Friday giving back only 0.23% from the day before, a mere $0.08.

This time I decided to trade $DMRC differently.  It is no longer a swing-for-the-fence position.  It is now a standard size investment for a buy-and-hold strategy.  My past mistake was trying to swing hard on this one when it has low liquidity and volume.  The inability to get in and out easily without getting whipsawed badly was what caused me grief.  So, I’m buying this one like an average long-term investor, a standard size that increases my tolerance for the volatility of price movement.  The nice surprise is that after Friday close, I already have some gain on my Digimarc position.

Fundamentally speaking, I already wrote up quite a storm on it since it used to be one of my largest position in my port.  Thus for those who like to know more, you can search my blog for more extensive coverage on why I like the fundamental.

Another stock I’ve been watching for a long long time and finally got in this week is $INFN.  In 2014, I was watching $INFN at $9ish but decided to pass ’cause I was not sure if it could break out of the $9.xx resistance.  I decided to skip it but regretted it ever since when price did break out of resistance and ran as high as $25.xx before falling back from grace.

Now in 2016, almost two years since I missed $INFN at $9ish, price miraculously appeared in front of me b/w $8 and $9 again.  I did a quick reading on their recent earnings which came out two weeks ago and found that they beat their numbers but offered poor guidance.  Poor guidance or not, Infinera, per my own due diligence, offers the best and fastest optical transport networking equipment, software, and services worldwide.  Our world will never be satisfied with current bandwidth speed; sooner or later, companies are going to start upgrading their network for even faster speed.  And Infinera will be there to take the orders.

But the recent drop of 33% after the poor guidance is WAY over-killed as far as I’m concerned.  So oversold that quite a few inside buying occurred after the drop.  I counted two directors, the CEO and the CFO all opening their wallets and bought stock on the company they are working for and believing in.

INFN_weekly

Seeing the strong support at $9ish from 2014 and the inside buying, I decided to take advantage of the gift and bought some as well. I bought on Thursday with available cash a bit below $9 and added more on Friday with freed up cash after the open to round up my investment size.  I would call this position a medium weight position.

“Ain’t you afraid of the downtrend that began from mid-2015?”

Nope.  Remember, I did the same thing with $GWPH when sellers pushed the price down from $133.xx in mid-2015 to $37.xx in March of this year.  I bought around $40.xx after seeing support at that level from late 2013 and lucked out on their positive trial result.  I believe $INFN support at $9 will hold and the oversold price will bounce back up soon enough.

There is an article on Infinera in Seeking Alpha which provided a more detailed fundamental if you’re interested- The Street’s Myopic View Of Infinera Is An Opportunity For An Investment

Next, I started the week adding more $CARA but then decided to reduce position size before earnings ’cause I realized short-sellers were going to push it down after earnings.  As expected, earnings drop (what else is new on a biotech still in developing stage?) and the ensuing sell-off happened.  I started to buy in the mid-$5.xx and bought all I needed.  Price went further down below my buying price but I didn’t care.  The earning update pretty much layout the pipelines that are already in motion.  And any success on these pipelines will turn this little company into a small cap in no time.  So, I knew the price below $6 would not be able to hold for long.

“Well, how do you know?”

Remember the big spike up on two Fridays ago?  That was my clue that there are strong interest in this stock.  That spike up was the reason why I was so interested in coming back to build a position.

CARA_weekly

See that big green bar ended July 22nd?  That was my clue.  This Friday close was a testament that there are interested parties buying up this stock.  The shorts are so busy shorting that they overlooked the silver lining in the fundamental- the world needs a new painkiller that does not cause addiction. Especially when addiction could lead to death. While Cara’s CR845 is still in Phase 3 trial, we can’t just write it off as no good as the short-sellers tried to convince us.  Well, I won’t write it off and even believe that their chance of success is better than 50/50.

However, the short-sellers will continue to do what they are doing and create volatility.  I decided to buy only a standard size investment on this as well so I can weather the gyration better.

Another one in my port I designated as standard size investment is $CERS.  Cerus also had a similar stock price actions on Friday after their earnings update.  Since my original position was not that big to begin with, I simply added a bit more to make it a standard size position during the morning drop.  Price rallied nicely to close positive on Friday.

CERS_weekly

Despite a slightly down week with a red bar, it is still a bar with a higher high and a higher low.  Price bounced successfully from Friday’s sell-off and found support at the $6.8x level.  The fact that price did not fall back down below the breakout line (which took about three years to break)  but still ended with a higher high and a higher low, it tells me the bullish momentum is still intact and strong.  I expect $8 to be tested soon.

I know a lot of “watchers” of this stock don’t believe Cerus will rise above from the past due to its multi-years of losses, but the Zika virus has changed the dynamic of this company.  Blood banks and hospitals can no longer afford to be “too frugal” when it comes to their blood supplies.  Cerus’ recent FDA approval on its INTERCEPT Blood System for platelet & plasma could not have happened at better time. (Red blood cell pathogen inactivation is still in trial but should have some update in the Europe by early next year.)   The Zika virus will encourage more adoption of Cerus’ INTERCEPT Blood System to enhance blood safety.  So it’s a matter of time before Cerus start to report positive earnings.

One more stock I designated at standard size investment is $MTCH.  Seeing price did not fall off the cliff after earnings, I decided to buy back a starter position.  By Friday, I added more to make it a standard size.

MTCH_weekly

The weekly chart ended with a green spinning top bar.  I’m going to let the symmetrical triangle helps me determine if I’ll stay for the long haul.  A break below trendline (blue line) may trigger me to cut losses.  Just because it is standard size doesn’t mean I’ll ignore bearish setup on my chart but it does allow me to breath easily against volatility.

There is one more stock I want to buy with a standard size allocation and it is $AMRN.  Although I missed the recent rally from $2.3x to current $3.3x, I want to own this one before the interim Reduce-it trial is released.  I’m now in the same dilemma as $DMRC not too long ago, I want to wait for the price correction to get back in.  $DMRC surprised dilution gave me the opportunity, I’m now waiting to see if I can buy Amarin cheaper than where it is now.  While I do not know if I’ll get a chance for lower price, I’ve set aside fund just for the eventual buy- either at lower price or at higher price.

AMRN_weekly

From the weekly chart above, $AMRN is now facing resistance at $3.33.  If this resistance hold and people starts taking profit, that will be my chance to start buying.  However, there is also a chance of a breakout to the upside from $3.33.  So, I’ll have to watch this stock diligently from here on.

Sidebar: I did trade $AMRN early in the week when price broke out of $3.  I didn’t want to buy before the breakout ’cause I wasn’t sure if the rally would hold.  By breaking $3, it removed all doubt so I bought.  However, I sold for small short-term profit when price took out the lower end of the opening range in the day before earnings.

Now back to my swing-for-the-fence positions.  Two are up and one down.

This week, $IBIO won their IP dispute in the legal court and price began to bounce back.  I didn’t think much of this lawsuit since I figured iBIO has a strong case anyway.  Apparently, the market doesn’t like uncertainty and it might as well be the reason why no contract announcement was issued.  Hopefully, with this IP dispute out of the way, we will see more news on contract announcement.

IBIO_weekly

From the weekly chart above, price bounced back into the consolidation range of $0.65 and $0.70.  I’m sensing that a breakout to the upside is going to happen soon.  Either an update from its fibrosis treatment or contract with drug developers will do the trick.

$AKER was also bouncing nicely for the week.

AKER_weekly

From the look of the weekly chart above, look like the “handle” of the Cup & Handle breakout pattern is being formed.  Any positive news from earnings this month is going to take this up over $4 easily since this is a very low float stock.

Fundamentally, I like their cheap disposable diagnostic tests that offer rapid result.  I put my money down for this one ’cause I believe their products will sell well.

$SEED unfortunately got some jittery investors bailing out before earnings.  However I still believe this one and is holding on to my shares.

SEED_weekly

Price found support on the uptrend line and I expect some bounce next week.  $SEED has made so much progress in developing their GMO seeds for China approval that I just could not see how I can lose on this one.  Recently, $SEED hired a new Chief Technology Officer to their leadership team.  I believe recent changing of the guards in management (new CEO, CFO, and CTO) is transforming this little company into a stronger entity to compete in the GMO marketplace. Eventually, expanded population will require all seeds to be GMO simply ’cause the world could not afford crops failure due to insects and drought.

Despite a drawdown early in the week, my port was able to recover later in the week with gain.

Current positions:

Main port (no margin): IBIO  SEED  AKER  INFN  CARA  CERS  DMRC  MTCH and 13% cash. (up 44% YTD)

Trading port (with margin): IBIO up 4% on position only and up YTD on port

My 2 cents

From my camera:

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Categories: Daily trading Journal, trading journal

Tags: , , , , , , , ,

3 replies

  1. Nice recap and lots to think about. I have a 1k share position in SEED, and feel as you do, good upside potential there. I will study your others, thanks for sharing your thoughts.

    • Hmmm bad typing skills, actually 10k shares of SEED avg cost 1.80. I also have 100 Nov 2.5 call option that could get going next week.

      • Thanks for reading! Good thinking on the call option. Let’s see if we can make some good money on $SEED.

        Cheers!

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