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

Have you ever been so dull with the market?  Or is it the market that is so dull that we become dull?  See, it is so dull that I’m talking in circle.  What give?

SP-500_weekly

The SP500 formed a weekly doji bar which can either be a pause between rallies or a topping formation.  Next week bar will shine more light on where the market wants to go.

Without a doubt, a dull market also made my port quite dull as well. Stocks that I predicted to bounce did not bounce well and earnings that I thought would take price up did not succeed in doing so.  What’s more, I did not follow my own advice and jumped into a position too soon…

Let’s start with $AMRN.  I’d put money aside for this position and I told myself to patiently wait for the dilution news that would surely come any day.  Meanwhile, I bought a starter position earlier in the week in order to warm up to the idea of buying back some Amarn after missing the rally from $2.40.  I told myself to wait for the dilution news before loading up. But on Wednesday, price began to climb in the morning after a nice rebound from the day before.  Seeing that price traded higher to the $3.4x area, I thought I would miss another run.  All of a sudden, I forgot all about the coming dilution and began buying Amarin as if I was going to miss another train if I didn’t buy pronto.  It was only after I bought a standard size position that I realized my carelessness.  And to rub it in, Amarin announced the dilution after market closed on Wednesday.  The exact same day I bought back $AMRN when I should have waited.

One more day and I would have gotten in perfectly as planned.

But it wasn’t to be.

So what did I do?

I bought even more on Thursday to supplement my “premature” purchase.  I doubled down my position plus some. Well, this is definitely one way to take advantage of the discounted price.

AMRN_weekly

From the weekly chart above, this recent rally and its ensuing correction has a much stronger backbone than the earlier spike back in March of 2015.  See the 1st arrow pointing to the red volume bar back in March 2015?  Now take a look at the 2nd arrow pointing to the red volume bar for this week?

Whoa!  The volume of the red bar exceeded the volume of the previous green bar in 2015!

Yes, did you see that in this week, the volume of the red bar is LESS than the volume of the previous week green bar?

What did that tell you?

It tells me that this rally is far from over.  There are a whole lot LESS people selling this time.  There are more long term speculators/investors willing to stick around for the “Reduce-It interim result” bet.  This is one of those bet that doesn’t come around often.  It’s a bet that everyone can see the external information such as positive peer reviews as well as multiple science articles describing the benefits of EPA in our body.  It is like giving an opportunity to walk to a Black Jack table after being informed,

“Go to that table in front of you, the shoe are LOADED with high cards. Bet on every empty seat there, the dealer is going to be busted!”

Yes, I’m beginning to see the substance of this trade. I was foolish to be so easily tricked to sell at $2.3x when someone dumped a quarter of a million shares at the market. The dilution news is actually the catalyst that is needed to push this one even higher, not lower as some doubters would like us to believe.

In my vision, Vascepa is going to become one of the famous pharmaceutical drug ’cause it is going to be used by a majority of population due to its multifaceted benefits from reducing heart attack to better mental state.

Will there be a stop due to efficacy and lives being saved?  Is it too early to tell?  Management kept on insisting that it probably won’t be stopped from the interim result but will be good enough to continue the trial until it is over.

Let me ask you this, if you are the management at Amarin, will you say something like, “Hey folks, we are so confident with Vascepa that we believe the Reduce-It trial is going to be stopped due to efficacy” even if you are very confident? 

I mean, seriously, this is the kind of statement the ambulance chasers would LOVE to hear!  It’s like easy money to these lawyers.

Easy money?

In the event that there is no interim stop, it will become easy money. However, management has already hedged its position by being ultra-conservative in their opinion.

Nevertheless I’m willing to BET that management is extremely confident that Vascepa will work the way it is supposed to.  And I think many others are coming in to make the same bet.  Just watch this, it is going to be 2010 all over again.

My 2 cents is that this rally will continue.

Hence, I bought even more $AMRN on Thursday to make this my third largest position in my port for the bet.  But to do that, I’d to let a few other positions go.

Which did you sacrifice?

Not so much of a sacrifice; but more of a “not working out” situation.

$INFN was doing fine until Wednesday when price started to give back gain rather quickly. I reduced position to protect profit as well as using the proceed to buy $AMRN.

INFN_daily

See that red bar under the blue arrow?  It was a bearish engulfment bar.  The bar reflected a bearish sentiment so I sold some to lock in profit.  By Thursday, I closed the rest of position when price fell during the general market rally.  I still like $INFN but perhaps it is still too early to get back in.  I’ll put it back on the watchlist for now.

The next one I let go is $MTCH.  I added to Match.com earlier in the week and even bought more on Thursday after the open when price looked like it was going to break $17.00.  Again, it wasn’t to be.  Price began to fall on a market rally day and a bearish engulfment bar was forming as well.  So I sold the rest of $MTCH and used the fund to buy more $AMRN as part of the double-down.

MTCH_daily

See the red bar under the blue arrow?  That is one bad bearish engulfment bar.  I never like bearish engulfment bar near resistance.  It is like you know the high probability of the dealer busting his 21 ’cause you counted a high number of high cards in the shoe deck.  In case you’re wondering, I’m talking about Black Jack card counting in Casino.  The appearance of a bearish engulfment at resistance or a bullish engulfment at support is like seeing a shoe deck full of high cards!  The dealer is going to be busted! “or” the market is going to fall due to bearish engulfment bar at resistance. This is how I use charts to help me made trading decisions. It gives me the probability reading without having to “count” anything.  Trust me, it is NOT easy to count cards in Black Jack game.  It requires a lot of memorization and practice to integrate the counting skill into a natural non-counting look on your face while you are counting in your head.  I gave up learning how to count card ’cause the effort is not worth the hassle.  Even if I get good at it, the odd of being kicked out of the casino is still very high.

Another one you see me typing in twitter is the opening range breakout.  During questionable day, I use the opening range breakout during the day to help me decide if I want to stay in the trade or not.  If I’m at a coin toss situation trying to decide to stay or not stay in position, I will use the opening range to make the decision for me.  A breakout of the upper or lower band of the opening range is the signal I look for. While they are not 100% predictive, they surely help me keep more profit on the table as well as “missing” rallies.  Despite the possibility of missing rallies, I’m still ahead by not giving back gain or turning my losses bigger by overstaying my welcome.

Remember, keeping profit is a LOT more important than missing rallies.  H*ll, we missed rallies every day!  Just because you missed the one you wanted to buy make no difference to missing all other rallies you were not looking at.  A missed rally is simply missing opportunity.  It doesn’t affect your pocketbook whatsoever.  On the other hand, by overstaying your welcome and not close your position when you should, you stand to “take money out” from your trading account and give it to whoever took your other side of the trades.  Thus, you will always see me making those “weird” decisions of getting out of the trades and missed the rallies despite my glowing review of the stock I just bought in.

Sidebar: If anyone is interested in learning the opening breakout system I used, here is a good book to read: The Logical Trader: Applying a Method to the Madness by Mark B. Fisher

One more stock I let go is $CERS.

CERS_daily

After seeing price did not continue with the upward momentum but instead reversed direction on Monday (see red bar under the blue arrow), I reduced my position further more. By Wednesday when price took out Tuesday low, I exited the position.  While price could still bounce off the trendline, I believe there are more momentum in my other positions which I like to beef up.

So where did the money go to after you sold $INFN, $MTCH, and $CERS?

You already know the first one which is $AMRN.  The other one I beefed up is $DMRC.

$DMRC again?  I thought you were done with loading up this one up?

At first I thought so too.  But when I look at the chart, I could sense the underlying strength (the way I feel about $AMRN) that is supporting the price.

DMRC_weekly

Despite a dilution at $30.00 for a secondary offering price, price actually rallied after the news.  What better benchmark of strength can you ask for when price rallied the following week after dilution on Friday?

My 2 cents is that there is no doubt in the retail industry that the Digimarc barcode is being seriously looked at.  Come on now, when most of major scanner vendors included the capability to scan the Digimarc barcode in their new digital scanners, you know Digimarc is in the “club”.

Take a look at the News release below:

“Shopping for The Future” Group Formed in Japan to study Digimarc® Barcode Impact

July 25, 2016
BEAVERTON, Ore., July 25, 2016 /PRNewswire/ — Digimarc Corporation (DMRC) today announced that a group of industry-leading companies in Japan has formed a study group regarding implementation of Digimarc Barcode. The “Shopping for The Future” study group includes 17 companies encompassing retailers, consumer brands and their suppliers.  The group is led by Monic Corporation, Dai Nippon Printing Co., Ltd., SATO Corporation and Digimarc.

When a group of business leaders in Japan formed a study group regarding the implementation of the Digimarc barcode, this is as good as a done deal as far as I’m concerned.  Reread the first paragraph- “…regarding implementation of the Digimarc barcode”  It did not say, “….regarding the feasibility of the Digimarc barcode”, it actually say  “…regarding implementation…”  As in, “how and what are the best ways to include the Digimarc barcode in all our packaging in the near future.  What is the time frame?”  That is my interpretation of the news. Now, am I the only one thinking that this is pretty much a foregone conclusion that Japan is “highly likely” to adopt the Digimarc barcode?

Yeap, I’m willing to bet that it is by building my $DMRC position back to medium size.  Giving the price advance after the dilution news, I’m sure I’m not the only one thinking this way.  If the short-sellers did not covered yet after the dilution news, even better because that mean there are more long investors coming in who believe that the Digimarc barcode will soon become the de facto standard format for displaying the UPC barcodes in all packagings where there is a UPC barcode.

There are a few more of my positions that I believe will become world domination as well.  Namely $IBIO and $CARA.

$CARA is going to rule the world with its non-addictive painkillers.  It may also be the one and only one company that have an effective medicine to reduce suffering from pruritus.  While I know nothing much about pruritus, I can imagine the severe discomfort of not being to remove the strong itchy feeling no matter how hard you scratch it.

My 2 cents is that the market went over-broad in its reaction to the removal of the highest dose in the original Phase 3 IV CR845 trial.  And the short-sellers are milking this news for all its worth.  I’m sorry to inform the short-sellers that this milking is over already.  I believe the market is beginning to realize that as long as the IV CR845 can effectively reduce the urge to become addictive to the painkillers drug even when it is a supplemental therapy to a much lesser doses of the real addictive painkiller, it is still a win situation.

And when IV CR845 is proven to ease suffering for those with pruritus, you’ve gotten yourself a “Perfect Storm” of catalysts that will drive $CARA up to the level we, as $CARA investors, have never seen before.

Buckle up your seat belt, we are going for a wild ride on a rocket with the short-sellers as partial source of fuel.  This is also known as short-squeeze.  A situation where there are an onslaught of new buyers coming in to swallow up all the asks that are available at any price.  An overwhelming shortage of shares materialized that would instantly blow pass the “safety margin” of the short-sellers that they have no choice but to compete for shares to cover not for cutting losses but for survival.  What is even worst is that unlike investors whose worst case scenario is that share price goes to zero, the short-sellers nightmare has only just begun ’cause the sky is the limit in price appreciation.

CARA_weekly

This week small spinning top green bar, to me, is a pause before breakout.  There is no reason for price to fall unless trial’s result is bad.  This is a bet for sure.  But I see this as a good bet for investors and a horrible bet for short-sellers.  That is why I suggest all investors and short-sellers to review the August 11th  presentation here-> Canaccord Genuity 36th Annual Growth Conference  It has an extensive data presentation regarding CR845 and pruritus.

Next is $IBIO

I don’t think I need to say anymore about iBIO since I’ve said enough with my prior posts. In summary, it is my BET that iBIO will dominate the vaccine production with its plant-based technology and the first one to come out with an effective fibrosis treatment that is going to save life or at the least extend life longer.  This is one stock I’ve to sit on until the time is right.

When will that be?  Will I still be alive when it happens?

Ha! You’re funny! I’ve no idea but I’m betting that one day, I will wake up to a fantastic price appreciation because of positive development. But it is a bet that is going to require a lot of patience and tolerance of the “dead money” syndrome. For the kind of return I’m expecting, I’m up for it.

IBIO_weekly

This week down red bar doesn’t mean anything to me.  It is just noise waiting for news.

There are another two stocks in my port that are going to do well because they are going to sell a LOT of their products.  It is $AKER and $SEED.

$AKER showed positive development in their recent earnings update.  The market size of their PIFA Heparin/PF4 Rapid Assay (or PIFA Heparin) test is much bigger than I thought.  And this is just the beginning.  They have pipelines with great potential waiting to launch.  I think the near term catalyst that is going to kick this one over $5 will be the FDA 510(k) approval for their Chlamydia Rapid Test.  Below is an excerpt from Q&A portion of the earning transcript:

Jules Augus

Thank you. Reference on the Chlamydia again, can you give us a forecast of the potential market for this test?

Raymond Akers

Well, Jules we’re in the process of trying to define the market size right now. We do know that in public health clinics and family planning centers, these are mostly urban – urban types of clinics that there are a little more than 4 million of these Chlamydia test done throughout the United States annually, now that, of course, doesn’t count which done in hospital emergency rooms, doctors offices, and the like.

We do know that we’re going to target these clinics first, because it’s a very focused marketing opportunity, we’ve done a clinical trials in these types of environment. So these folks know about the test and we believe we can get a very, very nice market penetration in that area. But as we get closer to the launch of the test, we’ll be informing the financial community exactly of what our strategic plan is, and what’s the overall market potentially.

Source: http://seekingalpha.com/article/3999045-akers-biosciences-aker-ceo-john-gormally-q2-2016-results-earnings-call-transcript?part=single

And this is not all, below excerpt from the earning transcript embodies the massive potential of Akers Biosciences:

Akers Bio has developed over a number of years. Technology platforms, which can be used as a basis for a variety of blood and breath tests, which are designed to increase the speed at which health information is delivered to a person, either directly or by their caregiver. Our most developed tests and the one which generates the majority of revenues currently. It’s a rapid blood test toward an allergy to the widely used blood thinner heparin.

We call this test the PIFA Heparin/PF4 Rapid Assay or PIFA Heparin. We’re here to talk a lot about this. We have also developed during the process of developing other rapid blood tests based on the same proprietary technology platform as Heparin test. These are for conditions, including Chlamydia and heart attacks. We’ve made some exceptional progress in the quarter on the Chlamydia test development, which I’ll talk about a little later on.

We’ve also developed proprietary and transformational ways to test a person’s health. By analyzing your breath with our digital health and wellness platform, our news line of breathalyzers for the health and wellness industry also sync with a reading device and an app for using your smartphone or tablet. With this breath analysis technology, we have developed a breath test for ketone levels associated with weight loss and a breath test for monitoring oxidative stress levels, which are a good indicator of a person’s overall health and wellbeing.

Further down the road, we’ve also been looking to commercialize breath test for biomarkers of asthma, COPD and lung cancer, all of which are in development. In most cases, what we do is use our technology to develop and sell faster and better ways to perform existing diagnostic or screen tests. Anyone familiar with the pressures on health systems to speed up diagnoses and thereby reduced costs, not just in the U.S., but all over the world who understand that this puts the company in a sweet spot for exclusive growth in the medical device sector.

The bold blue underlined areas are my own emphasis.

My 2 cents is that, eventually, their proprietary technology platform will become the ideal platform for other big pharmaceutical companies.  Perhaps a bidding war will result when Akers Biosciences begin to receive FDA approvals to sell their multitudes of rapid tests which, by my unprofessional opinion, will sell like hot cakes.  In fact, I’m so excited that Aker has a highly focused management team as well as an innovative marketing approach that I bought more on Thursday after the earnings update

Now, let’s talk about $SEED. After the earning update from Origin Agritech (aka $SEED), the stock “should’ve” gone up but instead price went the other way as in “buy on rumor and sell on news” syndrome. Here is the brief outline from the earnings news:

Origin Agritech Limited Reports Unaudited Financial Results for the Third Quarter Fiscal 2016

PR Newswire August 11, 2016Comment
BEIJING, Aug. 11, 2016 /PRNewswire/ —

–3Q16 Total Net Revenue Increases 12.1% YoY–
–3Q16 Non-GAAP Operating Loss Narrows YoY
–Achieves Positive Operating Cash Flow in 3Q16

Origin Agritech Limited (NASDAQ: SEED, “Origin” or the “Company”), a technology-focused supplier of crop seeds in China today announced its unaudited financial results for the third quarter of fiscal 2016 ended June 30, 2016 (“GAAP”).

Mr. Shashank Aurora, Chief Financial Officer of Origin, commented, “The sum of recognized revenue and deferred revenue as of June 30, 2016 was RMB473.9 million, or US$71.5 million, an increase of 6.0% compared to RMB447.1 million for the same period one year ago, driven by ongoing development and strong interest in our corn seed products and biotechnologies. The majority of deferred revenue will be recognized in the fourth fiscal quarter of 2016. Excluding one-time items, we narrowed both our loss from operations and net loss compared to last quarter as well as to the prior year. In our Seed Production & Distribution segment, we managed our inventory downward in the quarter as we improved our forecasting capabilities and better aligned seed production with demand. This helped generate healthy cash flow from operations, freed up working capital and reduced our debt. We continue to optimize our cost structure based on the exciting market opportunities that lie ahead.”

Source: http://finance.yahoo.com/news/origin-agritech-limited-reports-unaudited-103000170.html

What we read so far is a testament that things are improving. Not just improving on the financial front (cash flow positive by Q3 2016 means no future dilution) but on the opportunity front as well.  The new CEO, Dr. William S. Niebur, has so much to say about Origin Agritech in the China market that you have to read the earning transcript to appreciate the opportunities ahead.  I’m going to post an excerpt from the earning transcript that highlight a key point from the CEO:

We now see a trend among both multinational and local companies to seek out new partners to develop, register, and commercialize superior new corn hybrids to achieve their growth and profit objectives.

Origin will be an ideal partner for companies seeking to license new corn products with the Chinese market. Also Chinese government policy and regulations are favoring companies aligned with the global expansion movement called the one belt, one road policy. New government programs such as GREEN PASS product registration system will offer greater predictability and less uncertainty as we go forward. Both of these new programs will enable Origin to more fully realize the potential of its investments and achievements in the product development pipeline over the last decade.

Significant investment in advanced seed breeding and early stage biotechnology across China over the past 15 years is maturing. These high-end technologies targeted to create new growth opportunities within China, and eventually outside China, encourage Origin to partner with strong experienced global players who have commercialized and stewarded biotech traits previously.

Let me emphasize. A strong strategic partnership approach will be followed by Origin moving forward. Furthermore the push by the Chinese government for the Yuan’s inclusion into the IMF reserve basket by 2020 will lead to arbitrage opportunities to conduct more early stage research in China when the risk profile is high and the cost need to be monitored closely.

Source: Origin Agritech Limited’s (SEED) CEO Bill Niebur on Q3 2016 Results – Earnings Call Transcript

Basically, those who sold which resulted in dampening the spike missed the big picture.

SEED_weekly

And with coming news on partnership, I expect price to start climbing again when institutions begin to see that the new CEO knows what he is talking about.

And that is where I am now- narrowing my positions down to six stocks from eight only a week ago.  Imagine all six of them hit home run!

Due to drawdown from $IBIO and $AMRN (got in too early before dilution news); my port gave back a few percentage for the week.

Current positions:

Main port (no margin): IBIO  AKER  AMRN  SEED  DMRC  CARA and 4.6% cash. (up 41.4% YTD)

Trading port (with margin): IBIO down 1.8% on position only and up YTD on port

My 2 cents

From my camera:

 

017



Categories: Daily trading Journal, trading journal

Tags: , , , , , , , , ,

2 replies

  1. AMRN: I know your approach is mostly based on technicals (which is cool until the trial results are known), but the science take doesnt look too good for this stock. I cant post the info here. Let me know how I can send IF youre interested.
    Rgs
    Alan

    • Hi Alan,

      Thank you for your comment and information. I’m replying here again so that your comment won’t be left dangling here. The science take on Vascepa has been an on-going debate for the last three years and I guess the only way to find out if pure EPA in concentrated doses can reduce MACE (major adverse cardiac events) is to wait for the completion of the Amarin’s Reduce-it trial. Perhaps, we may even get a glimpse of its efficacy in the coming interim result. Good or bad, the bet is on.

      My 2 cents

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