Weekly thought on $IBIO, $SEED

“Time out!”

“The bull called for time out!”

And so the bull took a time out this week with a mini rally to hold the place.  What happened next week will depend on the resolve of both the bear and the bull.  Who has more resolve?  I’m betting on the bear but the market has a way to make me looked like a fool time after time.  But giving the weekly chart below, I think the bull mini-rally ain’t going to cut it. It could as well be a “pause” before continuation of the downtrend.  I also noticed that on Friday, some of the high beta stocks I’m watching are taking a bearish stance.  It seemed that more people sold their positions before the weekend.

SP-500_weeklyNotice that despite a green weekly bar this week, it’s still a bar with a lower low and a lower high. I think it’s going to take a very strong bullish tone on Monday to spark a rally from here; otherwise, the weight of the bear is going to put a lot of pressure on the remaining bull.  Technically speaking, a lot of signals are pointing to the south side – 5 MA is pointing downward, the momentum indicators are heading lower and volume is decreasing.  The bright sides are the upward slope of the 79 & 89 MAs as well as the 15 MA.  However, I’m not holding my breath for a bull market run next week.  But like I said, the market has been making a mockery out of me for awhile now.

This week was a hit and miss for me.  I took short-term profit on $PI for a nice pop early in the week but missed the big pops on the following two days after I sold!  Funny how I repeated exactly the same error of judgement on $PI as I did in April. I took short-term profit ’cause I expected the broad market to correct the following day. The broad market did correct but $PI went ahead and rallied hard!  Same playbook and I did not pay attention!  Interesting thing was that there was this “little voice” in my head telling me to “hold it for the long-term bounce” but my automatic reflex regarding the broad market took over and I sold my $PI shares on Wednesday right before the close.  I didn’t chase $PI Thursday morning ’cause I didn’t expect it to make a 11.55% jump that day when the broad market was down.  Oh well, that’s the beauty of the stock market, there is always this unpredictability that can give you a very nice surprise (assuming it’s going your way), hurt you seriously (if it goes against you), or leave you frustrated ’cause you are out of the position.  The middle part is why I don’t chase stock in general.  In order to chase a stock, I need a full mental alignment with the market to do so.

Speaking of full mental alignment, I believe I found it in $SEED!

The company, as predicted by the CEO inside buying of treasury shares, announced on Thursday “Origin Agritech Receives RMB 152 million as First Payment of Commercial Seed Business Sale.”  This is the news I’ve been waiting for before I stepped up to buy more. The news also included timeline on collecting the rest of the money.  Although there is also Form F-3 filing on August 24th as well that is part of the secondary offering related to the Equity Purchase Agreement, dated July 5, 2017 which, per my understanding, is like an ATM machine where the company can dip into the fund on a “as needed basis.”  So there is no immediate dilution as I understand it.

Below is an excerpt from the Form F-3 filing:

The Equity Line relates to ordinary shares that may be sold by the Company to the selling stockholder under an Equity Purchase Agreement, dated July 5, 2017, between the Company and the selling stockholder, as more fully described in this prospectus (the “Equity Purchase Agreement”). Based on the market value of an ordinary share on August 17, 2017, it is currently estimated that the Company would sell up to approximately 3,000,000 ordinary shares to the selling stockholder. Pursuant to the Equity Line, the Company is able to put to the selling stockholder a quantity of ordinary shares, from time to time, which the selling stockholder must purchase, at a price per share based on 94% of the lowest VWAP price of an ordinary shares during the five days after the put date. The ordinary shares purchased by the selling stockholder may be resold pursuant to this prospectus.

From what I understand above, there is no immediate dilution at this point since the company will sell ordinary shares from a “time to time” basis of “up to 3 000,000 ordinary shares.”  The bright side is that the Equity purchase agreement provides the company working capital on a “as needed basis” to allow CEO Bill to execute his plan. In summary, per my 2 cents, the collection from the sales of the distribution business and the Equity Purchase Agreement basically eliminates the cash flow concern that pushed price down to recent low of $1.3x.

Below is an excerpt from PR news:

“The proceeds significantly accelerate and expand our capabilities to develop and deliver corn biotechnology traits and corn product licensing business within China and around the globe. All current indicators point to a near-term commercial launch for the projected USD 5-6 billion GM-traited corn seed market in China. Origin’s leading corn germplasm collection and biotech trait platform are well positioned to monetize the novel business opportunity and strong customer demand for superior products.”

Thus, I added more $SEED on Thursday and Friday waiting for CEO Bill to execute his plan to bring Origin’s leading corn germplasm collection to the projected USD 5-6 billion GM-traited corn seed market in China.

Take a look at the picture below I copy/pasted from the recent investor presentation (which I think is worth a re-read) and you can see that the crop from the GMO seed on the left is far superior:

SEED_GMO_pict

Chartwise, the weekly chart is now showing a possible bottoming process with most technical indicators pointing to the upside- 79 MA is heading upward, momentum indicators are all pointing upward from the bottom, and volume increased with higher price.SEED_weeklyNotice the technical divergence in the momentum indicators which the signals are sloping upward (bullish tone) during recent downtrend.

More from the PR news,

“We see very exciting opportunities in the coming months and years with this new business model and we look forward to sharing more news on our growth story with investors,” concluded Niebur.

$SEED is now a buy and hold position, just like $IBIO, waiting for the company to implement its plan and share more news on its growth story.

What more can I say about $IBIO except that I’m here betting on the long game.  Below is a copy/pasted of my previous post of why I bought the stock (I added one more reason related to the “right to try” law):

The major reason why I like iBIO is IBIO-CFB03 discovered by Dr. Carol A. Feghali-Bostwick.

  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. The beauty of the success in IBIO-CFB03 is that the “right to try” law will allow dying patients afflicted with the deadly fibrosis diseases to immediately start the treatment as soon as the drug is available in mass production.
  5. IBIO plant-based technologies allows IBIO-CFB03 to be produced cheaply and economically so that insurance should not have issue paying for the treatment
  6. 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.

From a technical point-of-view, we may be seeing a possible bottom formation here.

IBIO_weeklyFrom the weekly chart above, price is firming up.

All I can say is that between now and EOY, there may be news regarding the filing of IND.  And when that happen, watch out for the violent spike skyward. Of course, that is just my 2 cents only.

Due to positive movement from $SEED, $IBIO, and gain from $PI, my port gained back some.

Current positions:

Main port: SEED  IBIO & plenty of cash (up 25.1% YTD)

Trading port: MENXF  IBIO

My 2 cents

From my camera:

GardenPict0927 007



Categories: Daily trading Journal, trading journal

Tags: , ,

2 replies

  1. SEED looking good…I may enter soon. GL

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