Weekly thought on $AKER, $CARA, $DMRC, $IBIO, $SEED

This week market is a yoyo play thanked to the shock that Deutsche Bank gave the market.

Lehman Brothers all over again?

Naah, I don’t think so. The financial market already knows how to handle this type of “situation.”  It’s not doing a Lehman Brothers ever again.

sp-500_weekly

The chart looks like it is getting ready to gun for a new high again.  Basically, with no interest hike and the Deutsche Bank fiasco out of the way, the overall market sentimental is bullish.

Wednesday ordeal with $SEED was a pretty bad “fumble” on my part and I missed the quick and easy money within reach. All because I failed to follow my own rule which is to take profit when there is an unexpected large gain appeared out of nowhere.  I became amorous with the prospect of Origin and failed to see the real money in front of me.  At the least, I should have taken some profit from partial sales; even I didn’t do that.  Where was I?

That was a damn good question. Since the situation was against me, I would describe it as my falling into the rabbit hole of greed and high price target of $5 to be exact.  From my perspective, $60 million cash and the GMO seeds technology should worth a minimum of five bucks.  I know most traders at one time or another fell into this rabbit hole.  Once you fell, there was no way you could escape it.

Why not?

In order to escape, you need to have the presence of mind to know that you are trapped.  Most people who fell into the rabbit hole do not have this presence of mind; hence the need to escape is not even in the thinking process.  And yet, with the target of five bucks in my head, I would watch the profit vanished in front of my eyes. That is how the rabbit hole got you.  This year alone, I fell into the rabbit hole twice.  The first one was when $DMRC hit the $44+ mark in January from my entry point of $35.xx.  I was expecting $50+ and watched the price came tumbling down back to mid-$30 in a couple of weeks.  This week $SEED’s vanishing profit all happened in one day.

How did you have the presence of mind last year to take profit on Amarin but not this time with $SEED?

Good question.  Last year with Amarin, I didn’t have a price target in mind.  In fact, it was the first time I over-weighted my position to such an extent that I was more concerned about keeping profit than having any price target.  So, the lesson learned this week is that I should not hold any price target in my mind under any circumstance in order to prevent me from falling into the rabbit hole.

Remember, this whole rabbit hole theory only surfaced ’cause $SEED gave back 30+% profit during the day.  Imagine if price had gone up instead; then I would be celebrating the benefit of a buy-and-hold strategy instead of discussing rabbit hole.  Funny how our mind works.

But then, I did say that $SEED was a buy and hold.  As a buy and hold, I am supposed to ignore price action during the day and keep my hands off the keyboard sell button. That’s the idea.  To witness the disappearance of paper gain is supposed to be an unavoidable painful part in the business of buy & hold. Eventually, the developing fundamental will prove itself and the price will again soar to new levels time after time with much zig and zag volatility. Yes, welcome to the world of buy and hold.

Having said all that, I could not help but allowing myself to be affected by the $SEED debacle.  After realizing I missed the opportunity to lock in profit at the opening of $SEED, I did not want to repeat the same error with $CARA when it was still trading above eight bucks. Cara Therapeutic, after reaching close to nine buck in the morning was beginning to fall hard and traded below previous day close.. I decided to unload some to lock in profits and looked to buy back cheaper.  Also, $DMRC was bouncing and I wanted to add more.  So, selling $CARA (on the way down) to buy $DMRC (on the way up) made lot of senses.  Of course, the much better sense would be to take profit on $SEED at the open and used the proceed to buy more $DMRC; but that ship had sailed so I sold the falling $CARA.

By Friday, I changed my mind and bought back $CARA to full-size position.

What made you change your mind?  $CARA dipped below $8 in the morning…

Actually, I had standing order to buy back some at $7.80; but price never reached that low.  Then a sudden fury of buying came out of nowhere and $CARA exhibited a sharp V-shape bouncing pattern.

cara_5min

From my experience, a sharp V-shape bounce has a high probability of continuing on the same direction of the sharp bounce. When I saw the strong buying, I knew I had to buy back $CARA immediately.   But in order to do that, I’ve to peel off from $SEED to do so (remember, I used the money I sold $CARA on Wednesday to add to $DMRC).

So in a nutshell, $SEED missing opportunity on Wednesday kicked off a series of action that altered the position size in my stocks.  $DMRC is now more over-weighted than ever. $CARA is my third largest position with $SEED demoted to the one with the smallest position size.

Ain’t you afraid that $SEED would bounce back higher next week?

The bounce is definitely a possibility; but I doubt it will happen next week. The horrible long and high volume red candlestick bar on the chart was quite unnerving.  Part of my mind was thinking, “that is one bad red bar to overcome!”   However, after I checked the monthly chart (see below chart), it was easier to peel off some $SEED.

seed_monthly

It turned out that this type of extreme long tail above the body is quite common. In fact, it happened three times already in three years- one in March 2014, 2nd in June 2015, and 3rd in last week.  And after the last two extreme long-tail bars, price fell consequently.  The only way to reverse this pattern is for the Origin Agritech’s CEO to execute partnership deals within October.

From the audio conference call regarding the $60 million asset sales deal, I also discovered that Origin Agritech’s seeds are currently being reviewed and compared against other competitors’ seeds.  Results are forthcoming and I think this is going to affect price one way or the other.  Another update from the conference call is that in about two weeks time, $SEED should have some information to share with potential partners in order to kick start the partnership process.  The road show to speak with the investment community will now postponed to November. I figured I have some time to buy back $SEED later.

Ok, but why keep adding to $DMRC?  Isn’t it already your largest position in the port?

Well, I couldn’t help sensing a breakout happening.  With the general market turning bullish, I’m seeing the possibility of price breaking out of $40 soon.  Take a look at at the monthly chart below:

dmrc_monthly

What I really like about $DMRC monthly chart is that September closed with a green up bar above last month doji bar.  This effectively increase the possibility of upside due to the fact that last month doji bar is no longer a topping formation next to the downtrend resistance line. In fact, $DMRC looks like it is ready to break out of the downtrend line soon.

The thing about Digimarc is that as more time passed, it can only grow stronger. Why?  It is because the Digimarc engine is working continuously in expanding the infrastructures to support the eventual adoption of the Digimarc invisible barcode. To me, Digimarc is like a young tree growing roots underground to support the eventful much larger tree.

Recent news updates are encouraging. Take a look at the development news this year since the January Big Retail show below:

My 2 cents is that the above news are writing on the wall that it’s a matter of time before announcing that adoption has already begun.  The next generation of automation in the retail industry depends on it.  There is really no other way around the Digimarc invisible barcode to offer the most efficient and economical way to advance automation in the retail industry.  Current method of searching for the UPC barcode in the package is what stopping full blown automation from happening since it requires human intervention to re-orient the package so that the scanner can read it.  Once that human intervention obstacle is removed, automation can take place from the beginning of the supply chain to the retail checkout function.  Not to mention more cost saving due to efficient inventory control using automation to monitor warehouse and retail shelves stocking.

I truly believe Digimarc is getting very close to the tipping point of adoption. If not this year, then it is highly probable in 2017.  Hence my increasing size in $DMRC for the ultimate bet.

$CARA also show a very strong bullish monthly chart.

cara_monthly

Take a look at the powerful green bar in September.  The September green breakout bar has the highest volume bar in the whole chart. There is definitely something cooking here.

What do you think is cooking here?

I think FDA recent rejection of Pain Therapeutics’ New Drug Application (NDA) for REMOXY® ER (oxycodone) extended-release capsules CII due to its weak abuse deterrent play a major supporting role to Cara Therapeutics.

How is that?

Below is an excerpt from the press releases: DURECT’s Licensee Pain Therapeutics Receives Complete Response Letter from FDA for REMOXY® ER (oxycodone) Extended-Release Capsules CII

In a press release issued this morning by Pain Therapeutics, Pain Therapeutics states that “The CRL focuses on the abuse-deterrent properties of REMOXY ER and proposed drug labeling. The CRL makes no mention of clinical safety, drug efficacy, manufacturing, stability, bioequivalence or any other issues from a prior Complete Response Letter.”

The announcement continues that “Pain Therapeutics is evaluating the CRL and plan further discussions with the FDA. The CRL specifies additional actions that are needed in order to obtain approval of REMOXY ER with label claims against three routes of abuse (i.e., injection, inhalation and snorting). These actions may take approximately a year to conduct and may cost approximately $5MM, pending discussions with the FDA and outside clinical/regulatory consultants.”

The bold blue underlined are my own emphasis.

Basically, FDA is no longer going to make it easy for new opiate drugs that don’t show strong abuse deterrent.  Just because the drug is “safe” to take in the beginning of the pain therapy is simply not enough due to the opiate epidemic that are killing patients who had successful minor surgeries through drug addiction. This new FDA stance is important ’cause there is an public outcry over this opiate epidemic.  And Cara Therapeutics is in a very good position to change this dreadful addiction issue around.  Of course, Cara’s CR845 has to prove itself first.  Since the preliminary data are encouraging so far, I increased my bet on $CARA this week.

On a side note, I sold my $CARA November $10 call options for small profit and bought the February $10 call options to give it more time.

$AKER bounced nicely on Friday.

aker_monthly

From the monthly chart above, despite a red monthly bar, price is still on an uptrend ready to breakout of the downtrend line.

There are many factors for me to be excited about my investment in Akers Biosciences:

  • New PIFA Heparin sales strategy
    • Below is an excerpt from recent earning transcript:
      • In the U.S., we also began wave-2, the PIFA Heparin strategy, which is focused on market share capture within Integrated Delivery Networks or IDNs, which are also sometimes referred to as regional healthcare providers. The rationale for this is simple. A single new integrated delivery network customer with most – multiple hospitals in its group has the capacity to dramatically transform domestic sales of this product.
  • New product sales from OxiCheks
    • Below is an excerpt from recent earning transcript:
      • We can also now expect to see likely meaningful contributions from other tests, such as, alcohol breathalyzers and BreathScan OxiCheks, as they gain momentum in the second-half of the year
  • Waiting for FDA to approve the recent successful Rapid Chlamydia Test
    • Below is an excerpt from the Chlamydia news
      • Akers Bio is pursuing FDA 510(k) market clearance for the US and is evaluating the regulatory requirements in the territories covered by its international distribution network. The Company will announce any developments with regards to the future commercialization of the test as and when appropriate.

This is one stock I will not trade for small profit since it will be difficult to buy them back once sold due to the tiny float available.

$IBIO found support at $0.55

ibio_weekly

What more can I say about this one?  This is all about Dr. Carol A. Feghali-Bostwick, Ph.D performing her magic.  Watch the video again…

Due to all my stocks performing positively for the week (except for $IBIO), my port is up nicely for the week.

Current positions:

Main port (no margin): DMRC  AKER  CARA  IBIO  SEED and 7% cash. (up 49.6% YTD “of course the % will be much higher if I had taken $SEED profit at the open on Wednesday. So I said it. Time to move on”)

Trading port (with margin): IBIO down 16% & $MENXF down 5% on positions 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. 3/10/16: The market has been punishing for a couple of days, so its good to see $SEED riding it out and actually gaining against the teeth of the gale. Thanks for your pointers.

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