Weekly thought on $AKER, $AMRN, $DMRC, $IBIO

In retrospection one must let go of frustration by laying it out- here I go… It was a complete waste of my effort trying to prepare for an eventual big market drop. Being conservative set me back with $AMRN and $CARA ’cause I did not buy them when they dropped to the “You’ve got to buy it at this dirt cheap price” level.  Available cash was wasted on $SPXU that went nowhere but down.  Although I cut the small losses, it was the lost of opportunity that costed me.  Cash should have been deployed on $CARA and $AMRN early in the week.  Yeah, should’ve, could’ve.  Ok, I’m done. Please ignore the above for obvious reason.

What obvious reason?

The hindsight one. Hindsight tends to make a fool out of us when the manifested event opposed our opinion (aka desire of our wish to come true).

Nevertheless, we must always stick to our overall strategic plan that included a safety protocol.  Even at the expense of missing some nice opportunity due to opposite scenario being the reality revealed.

So the everyday motto is, “where is the next best trade?”

Is anyone of you feeling this “new” wave of optimism that seemed to permeate our financial consciousness?  President Donald Trump brilliantly casts a net  of optimism so wide that “make America great again” is now the dominated consciousness of the country. When you have this kind of prevailing consciousness, the mind of the people will flow toward the same consciousness; hence the same goal.  Already, Ford will make Lincolns in Kentucky, not Mexico and Apple is exploring moving iPhone production to the US.   Suddenly, rate increase is no longer a scary proposition; in fact, the market seemed to welcome it. With such optimism, I’m modifying my safety protocol in favor of deploying more cash to risk capital- mainly $DMRC.

If anyone ever thought of building a position in $DMRC, this week was the best week to do so ’cause there was a wall of resistance at $29.30 that lasted for three days. No matter what the buy order volume coming in, $29.30 would not bulge. By Friday, the resistance finally gave way.  And it was this week that I bought back an over-weighted position on $DMRC for a fine price of $29.3x. Thank you very much for the wall of resistance.

I know, I’ve been in and out of $DMRC several times already, so am I for real this time?  I like to think so.  By now, the numerous progresses setting up behind the curtain could be so prevalent that the battle cry for adoption must seep through the secrecy somehow.  I think the tipping point of major adoption of the Digimarc barcode is going to happen next year- 2017. The coming Jan Retail show may provide better clue.

dmrc_daily

From the daily chart above, I’m expecting a breakout to the upside to penetrate the symmetrical triangle.  Both oscillators at the bottom of the chart are trending upward matching the price action itself.  To me, it gives a better than 50/50 odd of a bounce coming.

$AKER was a shocker this week.  The earnings was actually not so bad but the expectation going into the earnings was so high that even a decent earning could do no justice and it “frustrated” the hell out of even the loyal investors.  On top of that, failure to ship any significant HEPA tests to China in the 3rd quarter hampered the company effort in building a strong cash balance to counter the need to dilute.  Another misfortune was the inability for anyone listening in the conference call to participate in the Q&A session.  Per someone at the Stocktwits chat site, the person could not queue into the Q&A due to technical issue.  Frankly, I was quite “confused” when no one came out to ask question during the conference call.

“Come on! Somebody got to come out and ask about the dilution!”

Nope. Not a word.  Were they all sleeping?

Then someone in Stocktwits mentioned of technical difficulty queuing into the Q&A.  Aaah, so that was the reason… What is the odd of technical issue in accessing the Q&A during a conference call? Beat me.

The day of the earning update, price actually behaved in good order with a high of $3.55 and a low of $3.25. It was the following day that something went amiss.  For even a low volume sales, price dropped below $3 buck. A little bit more selling and price dropped even further. Someone was obviously not happy.  Then on Wednesday, Nov 16th, Akers Biosciences Inc filed a prospectus, suggesting it plans to soon issue some securities and all hell broke loose. Price was dropping and before I could figure out what went wrong, my stop loss kicked in and I started liquidating my position as well.  And when I found out the reason for the drop, I sold the rest of my position to cut losses before any announcement of dilution.

It was quite a wild day. And Thursday fared no better. Price cascaded down to $2.00 and remained there and $2.05 for quite awhile.

At first, I thought I was lucky to bail the day before; then I started to think…

Oversold? Let me re-read the earnings transcript one more time.

And the more I reread it, the more I became interest in the stock again.

Hey, for $2.05 (ask at the time) it was a bargain!

Then I started hitting the ask at $2.05 and before I knew it, I was chasing it back to $2.10 – $2.15 with other folks. Apparently, I wasn’t the only one figuring out what a bargain it was.

I am actually quite happy to be able to get back in at low $2.xx.  Per my understanding, the type of dilution AKER is offering reminded me of the ATM type of dilution that $DMRC used.  Meaning that the company can tailor their dilution with only the amount they really needed and sell them to selected big investors for working capital.  In other words, they are not going to unload a s*itload of shares with maximum dilution.  Not when the company is getting so close to cash positive in the coming quarters.  At least, that is my understanding and I’m making a bet based on this understanding.

I figured once the “relatively small” dilution comes out, investors will go, “What? That is?  Why didn’t you say so!” and then bid the price back up to over $3+.  That is my theory of what is going to happen. Believe it or not.

aker_weekly

Chartwise, there is a strong support at $2.  And a bounce from here will complete the Wave ABC correction I marked on the weekly chart.  Laugh all you want about the mumbo jumbo Elliott Wave Theory and its ABC correction counterpart.  If the technical supports my theory of a bounce which then provided the impetus for me to take a position in the face of risk, it is working for me. Remember, guessing a direction based on technical with no skin in the game doesn’t mean anything even if you’re right about the direction.  It is the execution of a trade after reviewing the technical that is one of the KEY factors in successful trading.

Anyway, I’m glad to be back in on $AKER at low $2.xx.  I may add more if there is more bounce to come.

Next I finally overcome my resistance to buy back in $AMRN.  I’d been waiting for it to correct to low $3 but it never went there. So I bit the bullet and got back in a bit below $3.4 on Friday when price began to run up to the close. Below weekly chart would show why I must get back in before I miss the potential big rally.

amrn_weekly

As you can see, we are looking at a possible cup & handle breakout pattern. While some would argue we have a breakout this week, I like to say we’ve a semi-breakout this week and an up move next week will confirm the real breakout.

$IBIO bounced another week with good traction.

ibio_weekly

Another week up and price will be back to 55 cents and above. With the way things are developing in the iBio world (read this article: iBio Expands Development Capacity for Plant-based Fibrotic Disease Therapies). I believe we are close to hearing some announcement of sort.  Whatever it is, I bet it will be good.  I’m betting price will head back up to the 70 cents and above before year-end.

Due to disappointing $AKER price action after earning update, my port did not achieve a significant increase as expected; instead I gave back a few percentage points. But it is only temporary as I expected $AKER to bounce back higher soon.

Current positions:

Main port (no margin): DMRC  IBIO  AKER   AMRN and 23% cash. (up 43% YTD)

Trading port (with margin): IBIO down 7% & MENXF down 23% 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: , , , ,

2 replies

  1. Really like your picks Zen….been watchin’ $AKER. I think market overreacted to earnings as well. I believe you made a good play. I do not own $AKER yet, but I would really like to take a position. I also like $CARA. Have a position in $ARTH. Lot’s of optimism on that guy. Feelin’ real good about that one. It’s been hangin’ around that .60 area for a while. Catalyst coming hopefully soon. Good Luck to Ya….

    • Hi Steve, thank you very much for your comment. I think $AKER is going to bounce hard soon. Sooner or later, more people will see the oversold situation and start buying. I’m still waiting for $CARA to come down further so I can pick some up. Good luck to you on $ARTH.

      Cheers!

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