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

This week is an important week for the bull ’cause the SP500 was able to bounce off from previous week red bar which effectively put a pause on the bearish momentum.  While this week green bar is not exactly a strong week due to its smaller range compared to previous week red bar, it is considered a bullish harami candlestick pattern which has the potential to be a sign of a reversal of the downward trend.  What I like about this bullish harami is that this week volume is higher than the volume of two previous weekly red bars which slightly increase the odd of continuing bounce.

SP-500_weekly

From the weekly chart above, you can see that it has been seven weeks since the market made new high.  Thus, it is highly possible that this side-way trading business is about to be over and the bull is ready to take over once again.  Let’s see if next week can confirm this possibility.

I learned a very valuable lesson this week after witnessing a strong price action of $PI which I am very bullish on its technology but somehow get sidetracked by my overall need to be conservative (aka playing safe).   Each day I waited for a correction to get back in and each day $PI rallied strongly (even on SP500 down days during the week). Looking back, Monday red bar gave me the possibility that I could get back in on a pull back to below the 79 MA resistance.  Unfortunately, price simply took off everyday from Tuesday to Friday.  The lesson here is that if I believe in the fundamental story of a company, I must have a core position no matter what I think may happen in the general market.  The lesson from $PI reminds me to stay true to my investment in $CARA by sticking to my core position.

$CARA took another tumble for the week.

CARA_weekly

However, from the weekly chart above, if you look at the previous corrections after a big jump in price, you can see that it is getting harder and harder for the bear to push it down.

  • In November 2016, price dropped 17.88% in one week after weeks of rally.
  • In February, price dropped 10.81% in one week after weeks of rally.
  • In March, price dropped 12.20% in one week after weeks of rally.
  • In April, it took THREE weeks for price to drop 10.11%!

Basically, with two major irons in the fire:

  1. A phase 3 trial of 450 patients for IV CR845 for post-operative pain
  2. A phase 2 trial of an oral formulation for arthritic pain

It is no longer easy for the bear to push this one down.  Although both of the trial results are supposed to be released by end of 2nd quarter, there is always the possibility of earlier release in one of the trial results before end of June.  Thus, it is critically important that I remain steadfast in holding my core position.

Why are you so confidence that the trial results are going to be positive?

The way I see this, since all previous trial results were positive so far, I just don’t see how increasing the size of the patient population is going to change the result when CR845 has shown to work on the body’s peripheral nervous system.  My confidence comes from the fact that all human beings with a functional and normal nervous system will react the same way to pain and pleasure.  It’s the same logic that if 100 people can get high on morphine, you can bet that one million people can get high on morphine as well.  And the real world already proves this point giving current opioid-involved overdose deaths have reached epidemic proportions.

My two cents is that the recent positive pruritus trial result is a strong testament that CR845 proves efficacy beyond reasonable doubt.  That is how I see it.  Below is a page from recent investor Presentation Needham 2017 that highlighted what I believe is major point of CR845-> Pruritus and Pain share the common pathway:

CARA_Pruritus&Pain

If they share the common pathway, logic dictates that if it works on pruritus, then it should work on pain as well.

While I’m holding a core position, I’m always looking to average down my cost on $CARA by managing my trading shares by selling when technical supports are broken and buy them back cheaper when new support begin to hold.  I sold my trading shares this week when price dropped below $17 and I’ll be looking to buy back the trading shares when price begins to bounce again.

The way I see it, while missing $PI is bad for my trading goal, it is still a valuable lesson in the form of wake-up call. It now serves as a reminder that I need to stay focus on the fundamental story of the other stocks I also own besides $CARA: $AMRN, $IBIO, $KGJI, $SEED.

I bought back $AMRN this week and will try my best to stay on the path this time around. As we approach August where the next interim data review will take place on its Reduce-it trial, I’m betting that the growing weekly script numbers will encourage a gradual uptrend from here.

AMRN_weekly

The above weekly chart reflected a pause on the bearish momentum with the weekly 5 MA touching the 15 MA. There is a probability of a further bounce from this week green bar.  The overall trend is still up despite the slow decline of the last nine weeks.  I’m betting that $AMRN is ready for the next wave up.

$KGJI bounced healthily this week with their release of the 2016 10K report.

KGJI_weekly

Last week, I made an estimate of Kingold total gold asset at $1.6 billions based on September revised 10Q report.  This week release of 2016 10K reflected a higher level of total gold asset of a whopping $1.9 billions.

KGJI_10K2016

2016 December Gold inventories classification
Inventories $119,435,595.00
Investment in gold – current $281,895,403.00
Investment in gold – non-current $1,493,938,551.00
Total Gold Assets $1,895,269,549.00
2017 increase in gold price 11.60% based on $GLD 11.60%
Kingold’s incremental increase in gold market value $219,851,267.68

Caveat: above is my personal interpretation only and is subjected to error in logic due to incomplete information

Since gold price increase for 2017 has been steady at 11.6% for the year (based SPDR Gold Trust [ETF]:NYSE:GLD), that mean Kingold’s total gold asset also increased by $219.8 millions dollar as well assuming no change in gold asset as of today.   IMHO, the increase alone already exceeds $KGJI current market cap of $91.77 million market cap based on market price of $1.39 (x 66.02 outstanding shares.)  And this is before we even factor in the operational profit of the gold business Kingold is involved in.  Of course, we will find out the true extent of this disparity when the 1st Quarter 2017 10Q is released.

I’m betting that the coming road show from management will clarify this disparity and that market force will bring back the fair market price based on Kingold’s total gold asset.  I’m also betting on rising gold price due to continuing world tensions from N. Korea.  What I like about buying $KGJI for its gold asset is that it is based on actual gold asset, not raw gold still yet to be mined (as in gold mining stocks.)

Finally, I decided to get back into $SEED seeing that price has dropped back to an attractive entry point of $1.8x level.

SEED_weekly

From the weekly chart above, I see a possible double-bottom formation here (see blue arrows). Fundamentally speaking, $SEED is a gateway to China GMO market.  Furthermore, the coming completion of sales of its operational facilities in the 2nd Qtr should fetch $SEED about $60 million dollars.  Interesting point is that after the announcement of shareholders’ approval of the sales on April 13th , price shot up but was sold down by sellers which continued on to April 19th.  This reminded me of the same price action of Kingold after its 4th Quarter earning conference call.  $KGJI gap-up was sold back down by sellers but price eventually recovered nicely.  I expect to see the same bounce  when $SEED moves close to getting the $60 million dollars in the 2nd quarter.

$IBIO continues to be nonactive but I believe it is about to wake up anytime soon.  The big question is when?  I wish I knew but I suspect that when it happens, it’s going to go straight up with no room to get in the middle.  My two cents is that you either get in now or you may end up paying dearly when it finally moves on news.  Again, I’m in for Dr. Carol A. Feghali-Bostwick’s discovery on fibrosis treatment.  Watch the video below:

Thanks to $KGJI gain in offsetting minor drop in $IBIO and $CARA, my port only dropped slightly for the week.

Current positions:

Main port (no margin): IBIO  CARA  KGJI  AMRN  SEED  and 47% cash. (up 3.3% YTD)

Trading port (with margin): MENXF IBIO CARA

My 2 cents

From my camera:

012

 



Categories: Daily trading Journal, trading journal

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  1. Weekly thought on $AMRN, $CARA, $DSPG, $IBIO, $KGJI, $SEED – Trading my two cents

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