Weekly thought on $AMRN, $CARA, $HIMX, $IBIO

“Have you ever played a yoyo before?”

“Sure, I played it often in the stock market.”

There is no question the Nasdaq was the one giving us a bigger yoyo experience for the week while the SP500 was quite unresponsive so to speak.  I consider it a good sign ’cause we don’t want to see SP500 faltering.

SP-500_weekly

By looking at the SP500 weekly chart above, the bull trend is intact with price over the 5 MA support (solid blue line). Per my book, when price is above a short-term moving average, the bull is very strong.

This week validated my concern about the risk of chasing a fast bounce if I tried to swing trade a stock for short-term gain when I believed strongly in the fundamental .  The problem of chasing a fast bounce is that you might end up buying back at what you sold for which eliminated the short-term gain you made earlier. Or worse, you ended up giving back all your previous gain plus some; thus increasing your average cost as a result.  But that is not the worse part that will eat you up if you truly believe in the fundamental story of the stock, it is missing the boat entirely.

Obviously, I’m referring to $HIMX price action this week.  Price made a surprising 4.8% drop on Thursday after Wednesday 2.1% drop.  Normally, I would consider taking profit in light of Wednesday drop but I didn’t want to risk missing the bounce. I figured the worst price could do was to hit the supports at $7.50 (89 MA and Fib 50% retracement from recent uptrend) but I didn’t expect it to happen in one day on Thursday. Oh well, the faster it got over the correction, the better it was is the way I see it.  Seeing price near the support at $7.50 after the morning drop, I wanted to add more so I decided to peel off 40% of my $CARA position to add more $HIMX below $7.60. Afterward, I just waited.

How did you get the confidence to add more Himax in light of the Thursday big drop?  

The confidence comes from the recent earnings update which I’ve already posted excerpts from my three previous weekly blog posts and my own logical deduction of how 3D scanning on iPhone 8 debut will wake up the world to the powerful concept of augmented reality (AR) on smartphones.  I believe the debut of iPhone 8 is the inflection point which will validate what the CEO Wu has been telling us all along since 2016 about the growing trend in AR/VR and the expected adoption of the technologies.  Below is an excerpt from 2016 Q2 earnings update which I believe is still very relevant now:

I will now turn to the LCOS and WLO product lines and AR/VR, their key applications. The recent staggering success of Pokémon Go has provided a looking glass into the future trajectory of the AR technology and given one early answer for why and how you’d want it to. Since its launch just over a month ago, the AR game has taken the digital world by storm with already more than 100 million app downloads and 20 million active users. Thanks to the viral popularity of Pokémon Go, AR is now getting the attention and consumer validation that we, at Himax, has always known to be possible. While we must give credit where it is due, the AR technology used by Pokémon Go today is actually still quite primitive. Compared to the AR/MR technologies being developed by our customers and partners, Pokémon Go pales in comparison in terms of how AR can bring alive the consumer experience to interact directly with the physical environment with more sophisticated holographic imagery, 3D sensing and real-time surroundings detection.

If you have not seen demonstrations of AR devices already, its holographic imagery will actually appear on your desk, your chair or walking next to you on the street. Moreover, the world of AR is much more than just gaming. It represents a next generation computing platform. Future versions of the technology will cover both commercial and consumer uses and will be much more sophisticated and produce an endless stream of uses. These could include daily computing in a virtual office, social networking, teleconferencing, et cetera. Due to the eye-opening effect of Pokémon Go, those who thought AR required several more years to gain traction are now changing their models as the game, almost overnight, elevated AR to mass-market and added 10s of billions of dollars to its market potential in the next few years. A new and lucrative marketing tool on top of AR software and applications are being created that will catapult AR device development and intensify further investment in the sector. We believe the path Pokémon Go started will prompt an AR industry that most didn’t think possible before.

From the above excerpt, I like this the best, Moreover, the world of AR is much more than just gaming. It represents a next generation computing platform.”  The next generation computing platform implies a massive sales of AR related products to become the next generation platform. Think on that!

I also noticed that CEO Wu has been trying to tell us multiple times that they are the “go to” place for AR/VR tech by the top name customers. Below are some example:

From 2016 Q2 earnings update:

Having invested in related technologies for over 15 years, we are uniquely positioned as the provider of choice for microdisplay and related optics, both critical enablers to the AR device. With little competition, we continue to work with 30 plus new and existing customers for various AR devices, many of which you have seen news from lately. Our design engagements now cover leading companies in a wide variety of industries such as software, gaming, search, mobile, social media, military, automotive, wearable, and toy. Many of our customers have committed huge amounts of R&D and capital to capture the rapidly expanding future of this game changing product category.

From 2016 Q3 earnings update:

Not only we see more diversified revenue stream from multiple customers, our list of customers continues to expand and it now covers some of the world’s biggest tech names. Such customers usually come to us for tailored solutions and pay for such developments.

This is clear evidence for our undisputed leadership position in the industry. Having invested in related technologies for over 15 years, we are uniquely positioned as the provider of choice for micro display and related optics, both of which are critical enablers to AR devices.

From 2016 Q4 earnings update:

Having invested in related technologies for over 15 years, we’re uniquely positioned as the provider of choice for micro display and related optics, both of which critical enablers to AR devices. With little competition, we’re currently working with over 30 customers on various current and future generation AR devices using LCOS micro display. Our increasing design engagements cover not just leading tech companies, but also niche AR players which bring in innovative product ideas.

The above excerpts gave me the impression that Himax is a popular choice for top name customers when it comes to AR/VR tech.

Then, in 2017 Q1, we were given a big bonus.  “3D scanning is one of the most significant new applications for the next-generation smartphone.” as quoted in the 2017 Q1 earnings update below:

We believe 3D scanning is one of the most significant new applications for the next-generation smartphone.

The view is echoed by many industry researchers. We are now seeing strong demand for 3D scanning products from multiple top name customers who are either collaborating with us or engaging us for advanced-stage discussion. Thanks to our absolute technology leadership.

In summary, it seemed to me that Himax has been the “go to” place for a lot of top name customers when it comes to AR/VR/3D scanning.  Thus, my logical deduction is that most of the future AR/VR/3D scanning products will have some Himax’s components inside if not all the key components (LCOS, WLO) or the 3D total solution.

After rereading the non-driver business updates from the last few quarters from 2016 to 2017 Q1, it is conceivable that the business of AR/VR/3D scanning may turn around in the 2nd half of 2017 with the prospect of going full steam in 2018 and onward thanks to iPhone 8 launching of 3D scanning in 2nd half of 2017.

My expectation is that the new iPhone 8 with its 3D scanning will spark tremendous interests such that the demand for Himax’s 30 customers’ various AR devices will be very high as well. Some of the industries mentioned are gaming and toy.  Each one of these industries have the potential to bring in massive revenues simply because of the sheer number of units that can be sold.  How ’bout the next fad toy with 3D scanning that parents have to battle each other to buy at toy stores?  And these are revenues on top of revenues from smartphones and AR/VR goggles.

I also believe Himax’s 3D total solution also offer the best solution to the non-smartphones customers because it makes the 3D scanning function as simple as an add-on feature to the main application (per my layman understanding. so pardon me if I’m wrong). A feature that enhances the utility and efficiency of the product significantly.

Imagine this question:

“Do you have 3D scanning device that is tiny enough to become unobtrusive in our product that recognize hand gesture so that if the consumer wave three fingers in front of the alarm clock we are designing, it will trigger the snooze to be in three minutes?”

I’m guessing that Himax can answer that question with their 3D scan total solution which may include the algorithm to recognize hand gesture.

Basically, with the main catalyst of iphone 8 debut with 3D scanning, it is simply too risky to swing trade $HIMX due to the possibility of missing the boat if you’re not careful.  Friday fast bounce might be related to Apple iPhone 8 update but when the reality of 3D scanning becomes real and substantial, you really do not want to chase it. I will feel better to have my position waiting for that to happen despite volatility.

Technical speaking, the daily chart below showed why I believed $7.50 is a great support.

HIMX_daily

There are the 79 & 89 MA supports as well as the Fib 50% retracement level from recent uptrend.

HIMX_weekly

The weekly chart above shows that the weekly 89 MA is holding. So far, all green bars since the big jump three weeks ago with the momentum indicators all pointing upward. There is good odd that the bull trend will continue on next week.

My other three biotech stocks aren’t doing too well though.

$CARA was doing fine until price dropped drastically in the last ten minutes before closing on Friday.  Before I realized it, my automatic response to such fast drop was to reduce my exposure as well.  I sold 2/3 of my $CARA open position to take the small losses and to reduce my exposure.  I still do not know what caused the drop off but theory of manipulation was mentioned to render $17.50 call option worthless.  Regardless of reason, the most important catalyst is the result of the two trials that will come by end of June which is only two weeks away.  I may buy back shares I sold next week when price stabilizes.

The weekly chart below showed a doji bar.

CARA_weekly

Technically speaking, it’s meaningless at this point ’cause the coming catalysts (trial results) are what will drive the stock price.

$AMRN also took a bit of tumble on Friday.

AMRN_weekly

From the weekly chart above, the trend is still up and there are major supports from the 79 & 89 MA supports.  I’m just holding my shares waiting for action related to the coming Reduce-it interim data review that is due by August/September of this year.  Meanwhile, weekly script continues to grow.

$IBIO is all about waiting for the company to file the IND application for their IBIO-CFB03 drug to cure and possibly reverse fibrosis disease.  Meanwhile, due to low volume and liquidity, it is subjected to price manipulation by anyone who wanted to throw money at it (buy or sell) before closing bell to make a mark.

For more information about Dr. Carol A. Feghali-Bostwick’s discovery, click on the link below and select the first video presented by Dr. Carol A. Feghali-Bostwick.

Go to 41 minute on the video if you want to skip directly to discussion on how IBIO-CFB03 worked on human skin, the significant cost reduction of using plant-based production (this is a very important issue ’cause the significant lower cost opens the door for insurance companies to approve the treatment), and her discussion with FDA.

http://www.sclerodermavideo.com/mobile/vidsmobi1.htm

Thanks to $HIMX recovery on Friday, my port only gave back a bit due to drawdown from $CARA, $AMRN, and $IBIO.

Current positions:

Main port (no margin): HIMX  IBIO  AMRN  CARA  (up 7.5% YTD)

Trading port (with margin): MENXF IBIO HIMX

My 2 cents

From my camera:

040

 

 



Categories: Daily trading Journal, trading journal

Tags: , , , ,

2 replies

  1. Congrats on $CARA

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: