Weekly thought on $AMRN, $CARA, $IBIO, $KGJI, $PI

I don’t know about you but I’m beginning to start doubting the market again.  After a gallant attempt to rally hard the week before with a nice solid weekly green bar, this week price action failed to follow through with another green bar to take out the downtrend line.

SP-500_weekly

As you can see from the weekly chart above, this week is a red spinning top bar directly below the downtrend line.  Per my book, a doji or spinning top bar directly below resistance has a high probability of bearish momentum.  Despite a green bar the week before, the fact that it had a lower high and lower low did not help matter since this week price action failed to continue the upward momentum.

Recent tension in the Middle East is not helping the situation from a stock market point-of-view.  Sound bite from the Fed reminding us that more interest rate increases are on the horizon is a scary proposition since I’m wondering if our economy is ready to absorb higher interest rate when the national debt level has increased significantly in the last decade.

There seems to be two camps with their own theory of where the stock market is heading- the first camp said there are too much money on the sidelines waiting to jump back into the stock market which will create another epic rally before the proverbial crash; and the other camp said the market is overdue for a major correction now.

The way I see it, I concur with this article, “The Cash On The Sidelines Myth Lives On” which I believe is a good read. (Click on article title to read.) In essence, it is the growth of money supply that provides the fuel for stock market rally.  Obviously, the growth of money supply from multiple QEs programs of the past provided plenty of fuel for the stock market rally in the last eight years.  And now with rising interest rates shouted from the hilltop by the Fed, will there be a gradual profit-taking from risk asset to a safer treasury bonds that offer higher interest rates?

What about the infrastructure spending from current administration?

Good question! Until we see some cohesion in the political arena that supports this spending, the current 2017 market rally might have already factored in the expectation of this infrastructure spending.  Any additional rally, IMHO, will have to come from some real concrete approval of spending from the gov’t.

Having said all that, you can now understand why I’m not feeling very bullish based on this week price action on the SP500.  However, I LOVE to be WRONG on my feeling ’cause I prefer to trade the long side more than the short side.  Still, I need to de-risk my portfolio.  Thus, with a heavy heart, I sold the trading shares of my $CARA position in the last minutes before the close on Friday.  Nevertheless, my core position is still higher than my original core position before the pruritus trial result.  And I’ll be looking to buy back the trading shares at lower prices (if possible) to lower my average cost.  Since my purpose is to raise cash to a minimum of 50%, I did not buy back the $PI I sold the week before.  I also sold $DSPG I initiated this week for profit in order to achieve my goal of 50% cash minimum.

But I did buy back some $AMRN looking for a slow climb to August interim data review on their Reduce-It trial.  I also continue to hold on to $KGJI which is basically my way of buying gold.  Kingold holds over one billion dollar worth of gold inventory and if price of gold skyrocketed, the gold value will be worth more than the debt they borrowed to procure the gold.  Yes, it’s a long shot but my holding is actually relatively small so I can take the heat for now.

I traded $PI during the week and was able to lock in some profit.  With my concern on the general market, I’ll wait for better bullish market condition before adding more $PI.  In the meantime, I’m only holding a starter position.

Of course, I remain a loyal investor to $IBIO. Recent price movement, to me, is just noise from weak hands who wanted to bail.  Since I believe that price action on no news has nothing to do with what the company is trying to do, I ignore the current price trend.  Remember, I’m buying for the fundamental story of iBIO and its fibrosis program, not the dilly dally of the weak hands trying to get out on thin volume. To understand the fibrosis program, watch the video below:

Due to drop in price on $IBIO and not much change in $CARA, my port drops slightly for the week.

Current positions:

Main port (no margin): IBIO  CARA  AMRN  KGJI  PI and 52% cash. (up 3.4% YTD)

Trading port (with margin): MENXF IBIO CARA

My 2 cents

From my camera:

GardenPict0927 063

 

 

 

 



Categories: Daily trading Journal, trading journal

Tags: , , , , ,

3 replies

  1. Hey Zen: wondering if you are keeping a watchful eye on $DMRC? I know you’ve traded it. A very small # of items (5 unique skus) showing up on wmt shelves past week or two… with digimarc encoding. And some other modest hints… also, bookings/revs might be starting to turn… $1.5M for first measurable/published bookings #’s when combining Q3 and Q4. Q1 conf call in a few weeks; might be worth a listen.

    • Hi ValueInvestor, I’ve put $DMRC in the corner ’cause I don’t like to trade low volume stock when I’m keeping an eye on market topping. I also like wait for the coming 1st Qtr earnings update to see how much progress they have made in their bookings.

      Thanks for your comment!

      • liquidity will likely remain light for some time to come. Likely after it is significantly determined if solution will be a success or failure.

        I’ve traded $PI a few times. It trades at a lot higher clip. And I think has a pretty good future ahead of it. If $DMRC achieves success, it would seem combining $PI + $DMRC would be logical.

        Saw your $CARA get some Cramer love a few days back. I listened to the CEO… sounds quite promising. For now, $DMRC is my biotech 🙂

        thx for ur posts. and your photography.

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