Weekly thought on $AKER, $IBIO, $MENXF, $SPXU

Bravo!  Bravo!  What a fantastic show ever!

The dramatic ending of this election was as exhilarating and unexpected as another M. Night Shyamalan’s movie. You guessed the multiple possibilities of how the story would end but you just didn’t know which one the director chose.  In the case of the election, we just didn’t know what the majority would choose.

I like to make bet that favors the underdog. The media blizzard controlled by the HRC campaign was so dominated that anyone could see the obvious bias.  The bias was so lopsided and “unfair” that the natural order of our social ecosystem would find a balance for the underdog. Knowing the bet was a pure gamble based on game of chance, I bought a starter position on $SPXU (ETF to short SP500) betting that the Trump would win the election simply because he was an underdog in the overall scheme of things.  Lo and behold, Trump led right off the gate and never let up.  The SP500 careened downward as expected and mirrored the action of Brexit and then with a bit of surprised “twist” completely reversed course and recovered most of the the loss by the following day at market open.

GET OUT while you’re still in the black! was my morning call when I saw the powerful reversal after turning on the computer.  I knew then that the market was going to go higher that day.

How would you know?

The logic is the same as a V-shape reversal.  When most of the 90+ points of SP500 emini futures was reversed in less than ten hours, the bear apparently lost the fight and the bull was in charge.  To hold on to my “belief” that a Trump win would decimate the stock market would be foolhardy when the evidence suggested otherwise.

I sold my $SPXU at market open and was lucky to keep a small consolation prize for my bet.  Immediately, I bought $AMRN, $CARA, $DMRC, $PI, $CERS, $ORBC to bet for the long side.  After a few hiccups in the morning, the SP500 roared upward to celebrate the Trump win.

And so I thought I was back for a bull market.

Nope.

On Thursday, after a strong open, I noticed that something was not right after about 30 minutes. Being mindful of the “expected market drop” for a Trump win, I was thinking maybe the market was having a delayed effect which prompted me to be quite skittish with my new positions. Prices were dropping so I began to liquidate the stocks I just bought only a day before. I was able to lock in nice profits on $PI and $DMRC before the eventual dip. The others were smaller wins.  Later, I found out the Nasdaq was tanking ’cause of the severe corrections of $AMZN, $AAPL, etc  caused by Trump remarks.

The strangest thing about Thursday price action was that while the Nasdaq was in deep negative territory, the DOW was up 100+ points with the SP500 still in positive territory.

What’s a disparity! was my thought process.

I remember reading a stock market book years ago which postulated that the Nasdaq is a leading indicator of the stock market direction.  Statistically speaking, if the Nasdaq is heading south, the SP500 will eventually follow.  While it is not true 100% of the time, the odd of it happening is better than 50/50 based on the analysis of the book. Sorry, I can’t remember the name of the book so take this postulation with a grain of salt.

So what did I do?

Again, I bought a starter position on $SPXU on Thursday to bet on the potential correction. Despite a negative Nasdaq, the SP500 closed against my $SPXU position.  Since it is only a starter position, I decided to take the heat and see where it would go on Friday.  Below daily chart gave me confidence to hold my $SPXU position despite being in red.

sp-500_dailyAs you can see, the SP500 closed with a doji bar with long wicks on both upper and lower sides. On top of that, the doji bar is next to the resistance at Sept 22nd high of $2179.99. As far as I’m concerned, a doji bar at resistance offer better than 50/50 chance of a correction.

Although Friday lower closing increased the odd of more correction to come, I was only able to recover half of my unrealized loss from the day before.  Despite multiple opportunities to get out at breakeven during the day, I chose to stick to my short position by holding onto $SPXU for the weekend.  Since it is only a starter position, the cost of being wrong is acceptable for the risk.

If you look at the weekly SP500 chart below, the resistance is easier to see from the uptrend line.

sp-500_weeklySee how this week green bar closed right next to the uptrend line resistance?  If market open higher on Monday, I will exit my $SPXU and take my losses; otherwise, I will ride it as long as I don’t get stopped out with a trailing stop.

In a nutshell, since I’m still bearish overall, I’m again holding only $AKER, $IBIO in the main port together with $SPXU and a lot of cash.  I also continue to hold $MENXF in my trading port.

Like most biotech, $IBIO recovered from the week before and it added to my weekly gain along with my gains from $PI and $DMRC.  Btw, despite $IBIO price correction like all biotech stocks out there, I’m feeling even more positive after iBIO made the following announcement this week:

iBio Expands Product Development Capacity of cGMP Plant

Below is the excerpt that is music to my ear since it supports the main reason why I’m holding iBIO long and strong:

“iBio is currently engaged in development of several vaccine and therapeutic candidates for third party clients and is significantly expanding its commitment to the monoclonal antibody product category. The pilot plant expansion enables the company to remain fully committed to its own proprietary anti-fibrosis therapeutics program while taking on promising programs with quality clients.”

The above underlined blue highlight is my own emphasis.

The anti-fibrosis therapeutics program is happening and is coming. 2017 is going to be an exciting year for iBIO is my take of thing.

$AKER coming earnings report will determine the future direction of this stock.  Of course, I’m betting for a surprised earning number and/or positive guidance for the 4th quarter with price heading north afterward.  Let’s see how it goes.

While I don’t talk much about $MENXF, I’m going to present the weekly chart below:

menxf_weeklyUsing the Five Wave pattern from Elliott Theory, I believe there is a possibility of price heading upward from here to complete the Wave 4 pattern which also will complete the recent ABC correction as well.

Overall, my port gain back some this week.

Current positions:

Main port (no margin): AKER  IBIO  SPXU and 56% cash. (up 45% YTD)

Trading port (with margin): IBIO down 18% & MENXF down 19% on positions only and up YTD on port. I’m still up YTD ’cause I did not load up IBIO and MENXF the way I loaded up $ARTH before which I doubled on the gain.

My 2 cents

From my camera:

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Categories: Daily trading Journal, trading journal

Tags: , , , ,

5 replies

  1. Congratulations on Amexit ! In the lead up to the election, we in the UK were given a v bad impression of Trump, concentrating on locker room talk foul mouthed outbursts and ‘lunatic’ policies. But in the grand scheme of things, what does it really matter to a nations destiny whether he bragged about being a lothario. What matters is his passion for the job, his vision and his ability to steer the ship.

    I was MOST impressed by his victory speech…create jobs by rebuilding infrastructure….charge countries for US protection….punish countries (economically) for currency manipulation….stay out of wars in far flung places….put America first. Perhaps most astonishing was the markets reaction….again I think it was that victory speech. Once the clown show was over, people suddenly realised this really could be good for the country, the people and the economy. Of course politicians never completely fulfill their promises, but it will be a wild and interesting ride. I for one welcome it.

    GL all.

    • Oh BTW, I got it completely wrong. Im mostly invested in bio so I imagined a Clinton win would really harm my portfolio, while a Trump win would harm just about everything, so I mostly went to cash…..safety first. Seemed like the sensible move….Well ya win some and lose some.
      Well done you!

      • Ditto on safety. While gambling on outcome may have its reward, sometimes people forget that the other side of the coin is loss that one may not be prepared for. Going forward, one must maintains flexibility in our perspective of coming changes with an eye on safety at all times.

        Thanks for the comment!

        Cheers!

    • Yes, I agreed. The victory speech was inspiring as well for the economy and probably the main reason why the SP500 reversed course after being down over 90+ points. The challenge is to get the money to build the infrastructure. Those TARP money that went to bail out the financial crisis should have been gone to rebuild infrastructure…

      There is a challenging road ahead and I believe the world will never be the same again- hopefully for the better.

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