Weekly thought on $HIMX, $IBIO

Are you feeling the summer heat?

Yeah, it’s so hot that I have to sell my stocks to cool off!

And that is exactly what I did this week. I’m having one of those moment where I completely lost my mojo to swing-for-the-fences.  For me, swinging for the fences requires my state-of-mind to be in complete harmony with the broad market and the stock itself.  When they are in sync, I am fearless and feel invincible. Nothing can rattle me.  However, once misalignment begins to rear its head, I can get thrown off the track and my market harmony disrupted.  By then, I’m on thin ice.  Over the years, after many trials and tribulations, experience told me in the event of my misalignment, the probability is better if I act quickly to protect my wallet first before getting lost in the battle against volatility- a fight that can’t be won every time.

Let’s start off with the SP500…

Last week I already felt the pull of the bear when both Nasdaq and SP500 took a negative turn. I even sold some of my two main stocks but bought them back when they did not exhibit the same behavior at the broad market.  The irony of this week is that while both the Nasdaq and SP500 bounced slightly, I felt the pull of the bear even more.

Why?

Take a look at the daily chart of the SP500 below:

SP-500_Daily

Although Friday bounce is what make the week closed slightly higher, the volume was below average.  To me, that is one rally with no conviction. Furthermore, even the daily momentum indicators below are showing technical divergence.  See the yellow line trending downward. This parallel the weekly technical divergence as well (see below weekly chart).

SP-500_weeklyWhile it can be argued that the weekly volume is lower than average due to the half-day trading on Monday and holiday on Tuesday, it is the Friday volume that made me suspicious of the broad market bounce.  Furthermore, this weekly bar is a small range spinning top bar; per my book, a spinning top bar next to resistance has a high probability of bearish tendency.  Thus, I’ve to think twice about heavily invested in a potentially bearish broad market.

This week, $AMRN gave me the first sign of weakness as opposed to last week strong movement and I acted accordingly since I had no intention to give back gain I was sitting on. Let’s take a look at the daily chart below:AMRN_dailyFirst, Wednesday inverted hammer candlestick (see blue arrow) has a bearish tone due to the possibility of forming a shooting star candlestick formation which can indicate potential price top and reversal.  Thursday did not confirm the shooting star formation so I left $AMRN alone; but Friday weak price movement did confirm the shooting star formation during the day and I acted accordingly to protect profit.  I peeled off trading shares first and then reduced core position as price continued to show weakness. By the end of the day, my remaining core position was stopped out.  Thus, currently I’ve no position at the moment.

BTW, my action this week has nothing to do with the long-term prospect of $AMRN which I believe still has strong leg to move higher depending on Reduce-it result and the possibility of a buy out from BPs.  I’m merely trying to protect my profit from short-term bearish movement.  I’ll be looking for a way to buy back in once the dust has settled and price begin to show strength again.

From a long-term perspective, the weekly chart below showed that the multi-year Cup & Handle break out is still being confirmed.  AMRN_weeklyWhile this week did not reflect another strong green bar to further support a strong break out, the break out is still in play even if price is to fall back down to $3.65 support area.  In other words, as long as price can bounce off the support at $3.65, the break out is still in play but will need to be confirmed later.  I’ll be watching $AMRN closely.

$HIMX inability to break out of the 79 MA resistance concerned me.HIMX_weeklyIt has been five weeks since price hovered around $8 with decreasing weekly volume.  Combined with my concern regarding possible broad market correction, I also decided to lighten up my exposure by selling off my trading shares as well as reducing the core position.  The deciding factor was the low volume on Friday rally.

Make no mistake, I’m still a strong believer in the long-term prospect of Himax but because of concentrated allocation I put into my stock, I rely heavily on my interpretation of the chart and technical picture to protect my position.  Obviously, I’m also watching this one closely.

$IBIO continued to meandering around waiting for news.IBIO_weeklyThere is really nothing for me to do but wait.  This is definitely not a stock I can trade in and out like $AMRN and $HIMX due to thin volume.  This is a different kind of bet. As far as I’m concerned, it’s a large poker bet which took me awhile to accumulate due to lack of shares being available.  When it comes to pure speculation with an extraordinary return on risk, I can’t find anything better than $IBIO.  It’s speculation as its finest!

Here is why I have to make this large poker bet in this lifetime:

  1. I trust Dr. Carol A. Feghali-Bostwick’s discovery (watch video from link here: http://www.sclerodermavideo.com/mobile/vidsmobi1.htm)
  2. IBIO-CFB03 worked on human skin. Thus, the probability of success is far superior than pre-clinical tests that worked on mice only.
  3. Discussion with FDA led to the possibility of conducting a combo Phase I and II trials together that will allow IBIO to test IBIO-CFB03 on patients afflicted with the deadly fibrosis diseases. So the result of its efficacy will be known after the first trial.
  4. IBIO plant-based technologies allows IBIO-CFB03 to be produced cheaply and economically so that insurance will not have issue paying for the treatment
  5. The only downside is the time it takes for IBIO to file the IND application to kick off the Phase I & II combo trial. Obviously, the long period of waiting has unnerved quite a few investors.

As far as I’m concerned, since this is a poker bet, I can wait as long as I need to for IBIO to file the IND application.  It is a risk I gladly accept for the possibility of making a once-in-a-lifetime historical return on a biotech stock.

As you can see, my action this week is all about trading the technical to protect my gain and nothing to do with the fundamental which I still believe in.

Thanks to another week of gain from $AMRN, my port gained a bit for the week once again.

Current positions:

Main port (no margin): IBIO  HIMX  (up 20.1% YTD)

Trading port (with margin): MENXF IBIO HIMX

My 2 cents

From my camera:001

 

 

 

 



Categories: Daily trading Journal, trading journal

Tags: , ,

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