Weekly thought on $CTEQF, $KNDI, $IBIO, $SEED

Well well well, the SP500 made new historical high once again.  After a feisty August where price fell to the daily 79 & 89 MA “magical” supports, price bounced back to make historical high.  This bull is relentless!

SP-500_DailyAs you can see in the daily SP500 chart above, the bull is strong.

However, the Nasdaq is not behaving like the SP500, it is having its own doubt…

COMPQX_dailyThe above daily Nasdaq chart is reflecting a double-top.  Thus, I’m going to pay more attention to the Nasdaq price action next week to see if price will breach the double-top to the upside; if not, I’ll be cautious since September and October had a history of market correction.  Take a look at the monthly SP500 chart below:

SP-500_MonthlySince 2009, there were five years with correction between September and October. Some year, price corrected severely but bounced back to close positive in the same month (e.g. October 2014), I counted that as well since everyone had to suffer the initial leg down. That is 5 out of 9 times or a whopping 56% chance of a correction between September and October.  Yes, despite a historical high this week in the SP500, I’ll be monitoring closely for possible bear attack between now and end of October.  And I think Nasdaq will give us a head up in this regard if there is a bear attack coming.

With market making historical high, I’m happy to say that my port is doing the same.  I like to say that this week is imbued with some mysterious force.  Let me explain.

Mysterious force #1:  I’d a rare comment appeared on my previous week blog post so it got my attention.  It was a post by runningrep and he is usually the only guy who posted comment here and I’m always happy to hear from him.  Usually, when someone posted a suggestion on a symbol, I would take a look at it and see if the suggestion passed my “filter” of interest.  If it passed, I would dig deeper; if it didn’t, I passed.  Although runningrep made a suggestion on $CTEQF (Clean Teq Holdings Ltd Melbourne), what caused my immediate attention was his reference to the future of electric car.

Bingo!

The moment I read “future of electric car”, $KNDI immediately came to my mind so I checked the chart.  Lo and behold, price broke out of the daily 79 & 89 resistance (it was Tuesday after market close) and closed 10+% higher.  Then I searched for news and found the following article, “China to ban production of petrol and diesel cars ‘in the near future’”  Although the news was out on Monday, $KNDI ran up on Tuesday with high volume.  So I figured with such a strong catalyst (China ban on petrol and diesel cars is a very BIG deal), there got to be follow through to Tuesday run, so I made it a point to buy after the market open on Wednesday morning.  At this point, all I care is the momentum and interest generated by Tuesday breakout bar and the high volume.  The fundamental aspect of Kandi would have to wait.

Wednesday morning after market opened, price did not immediately run up; in fact, there were large ask trying to scare people to take profit and sell.  Decision, decision, I decided it was the short scare tactic and decided to take advantage of the large ask and hit them with my buy market order.  I kept hitting them until I got the size I wanted.  Lo and behold, I wasn’t the only one hitting the ask and price took off.  By the end of the day, I was pleasantly surprised $KNDI achieved a 17.24% gain for the day.  Seeing a nice generous profit in just one day and remembering how I gave back profit multiple times by overstaying my welcome, I decided to take profit before market close.  It was not an easy decision to execute because even though my analytical mind said to take profit, my greedy mind had a strong hold on my mindset.  To get around my greedy mind, I said to myself that “I’m only taking partial profit.”  It worked.  Once I started peeling off shares, selling the rest became much easier.  This is how I tricked my mind to get around the greedy mindset.

Thursday run up at the open gave me pause but I ignored it and did not chase it.  Price eventually corrected and I felt vindicated.  Friday came and price did not drop further down and I thought the bull would run it back up again.  I started to buy again but only this time, there were no follow through with other buyers.  After waiting all afternoon with no sign of bull run, I decided to unload and hold only a relative small size.  But Friday action was not without cost, I gave back some gain I made on Wednesday; but the net gain was still generous.

The reason why I immediately checked on $KNDI after reading runningrep comment is because I had a profitable history with $KNDI.  I was lucky to ride $KNDI from $5 to $18 back in 2013 to the 1st QTR of 2014.  Basically, my $KNDI trading profit contributed to my current port size.  The reason I got out of $KNDI in 2014 and never looked back till this week was because Kandi did not build the number of car rental garage they promised.  So I considered myself lucky that I got out even though price went back to $22+ in July 2014.  I did not chase it because they still did not build the number of car rental garage they promised.

With the momo game out of the way, I began to dig into the Kandi fundamental to learn more.  The financial isn’t pretty that is for sure.  However, there is a much bigger factor involved that can upend any dire financial situation Kandi is in.  China ban on petrol and diesel cars is a very BIG deal!  Remember, the five millions shares shorted is already established BEFORE the news on China ban on petro and diesel cars.  So the shorts are obviously nervous and will emphasize Kandi dire financial situation with a loudspeaker so to speak.  The shorts are not completely wrong and there is still a question of liquidity.  With only $7.4 million in cash and a huge current liabilities of $191.8 million as of June 2017, it’s a scary proposition.

Nevertheless, I’ve seen enough companies with much worse financial numbers rose from ash to prosperity.  Somehow and in some way, management will find a way to get out of their hole.  Will there be a white knight to partner with Kandi?  Will there be a large subsidy check from the gov’t arriving in time?  How ’bout a gov’t bail out?  Better yet, how ’bout unexpected strong and increasing monthly sales of Kandi EVs?  Sure the shorts will likely think that I’m “dreaming.”  There’s a 50/50 chance that the shorts are right.  But I will never doubt the work of mysterious force.

Never ever doubt a company/management with a will to survive.

Don’t forget that $AAPL was on the path to bankruptcy until Steve Jobs came back to save the company.  It was Gil Amelio (former CEO) who approached Steve Jobs which triggered a serious of events that ended up with Steve Jobs running Apple Computer again.  It is this kind of unexpected event that can turn a company around.  Will there be one for Kandi?  I’m betting there will be one in light of China ban on petrol and diesel cars.

Thus, I’m keeping a relative small amount of shares in order for me to monitor $KNDI.

KNDI_monthlyFrom the monthly chart above, I could sense a bottoming being formed here.  Notice the 5 MA is now heading up and ready to cross over the 15 MA. Meanwhile, both momentum indicators below are also heading up.  I’ll be monitoring $KNDI closely ready to jump back in.

Mysterious force #2: $IBIO is getting heavy attention on no news.

IBIO_dailyNotice the volume data on the daily chart above. Despite a red bar on Friday, it was still an increasing volume compared to the last two trading days.  The red bar was due to someone dumping a bit of shares at the closing bell to make it look bad. Ha! Nice try!

So what’s up with the volume?

I like to attribute this sudden increase in volume to the “wisdom of the crowds” phenomenon.  This is why I called this mysterious force #2.  For some unknown reason, the “interesting” crowds can sense something is up and they will flock to the site of interest.  And this week, they flocked to $IBIO.

Interesting enough, on Friday, the company surprised investors by releasing their June 2017 10Q BEFORE the due date since it had a history of filing for late reporting.  This is a pleasant surprise.  It’s a sign of good omen.  I dug into the 10Q and searched for fibrosis.

Below is an excerpt from the IBIO  June 30, 2017 10K report:

iBio’s candidate product has demonstrated efficacy in both animal disease models and through the reversal of fibrosis in human skin organ culture. Preclinical studies have established a strong safety profile for IBIO-CFB03 with no toxicity seen at concentrations well above the predicted effective doses. The drug is readily diffusible into organs and tissues and can reach its target site via several modes of administration. Systemic administration is effective at reducing skin and lung fibrosis. The anti-fibrotic effects of IBIO-CFB03 are observed even after the onset of fibrosis, suggesting that it is capable of reversing fibrosis—an effect not observed with any of the potential anti-fibrotic therapies that are currently in clinical use. Patients with existing fibrosis enter the clinic long after the onset of their disease, and thus do not benefit significantly from a drug used to prevent fibrosis rather than treat existing fibrosis.

Here it is, loud and clear. “NO TOXICITY seen at concentrations well above the predicted effective doses.”  From my perspective, this along will increase the odd of success in the coming Phase I & II combo trial to be tested on patients afflicted with fibrosis.  Here is another key point, “it is capable of reversing fibrosis.”  The skeptical ones will say, “they haven’t even started the human trial yet, so it’s all ‘hope’ for now.”  Well, I beg to differ!  IBIO-CFB03 was tested on human skin kept alive by biological mean and it worked!  It actually reversed fibrosis on human skin.

Now put the two together–> No toxicity + worked on human skin

and what do you get?

To me, the probability of success is better than 50/50 with no adverse event.  Therefore, it is my 2 cents that once the IND filing is submitted and accepted by FDA, you can say good bye to below $1 for $IBIO.

Below is another excerpt from the 10Q that, to me, is a positive sign:

“The next milestone – filing a New Drug Application with the FDA or foreign equivalent covering the Licensed Technology (“IND”) – initially became due on December 1, 2015, and on August 11, 2016, the agreement was amended and subsequent six-month extensions have been automatically granted extending the due date until December 31, 2017.”

With the last shareholder update that included working on completing the requirements for filing IND, I believe it is possible that an actual filing will take place before December 31, 2017.

My bet is already on the table.  And I’m feeling very excited!

$SEED is holding its ground with higher volume than last week.

SEED_weekly

There is really nothing more for me to say about $SEED except that I’m waiting for early acceptance of GMO seed by China.  It’s magic waiting to happen is all I can say.

Of course, thanks to runningrep, I also bought some $CTEQF since I like what I read in here: July 2017 Investor Presentation.

The major reason why I bought $CTEQF is because of the coming demand for raw materials to produce more lithium batteries for the paradigm shift to electric vehicles in the auto industry.  It is happening and it is a wise global decision to cut carbon dioxide before global warming destroy the world we live in.

Clean TeQ’s Syerston Project holds a potential massive cobalt and nickel sulphate deposits needed for the lithium-ion battery industry.  Take a look at the raw material breakdown of an active cathode active material in a lithium battery below:

CTEQF_batteryAs you can see, cobalt and nickel made up lion share of the cathode active material with lithium occupying less than 30% of the active material.

CTEQF_weeklyDespite a high price from the chart, I still bought it because it broke out of the previous high at 88 cents.

I think this post is long enough already so I’ll stop here.

Thanks to generous gain on $KNDI and uptick on $IBIO and $SEED, my port gained a few percentage point for the week.

Current positions:

Main port: SEED  IBIO  CTEQF  KNDI & cash (up 36.2% YTD)

Trading port: MENXF IBIO

My 2 cents

From my camera:

046



Categories: Daily trading Journal, trading journal

Tags: , , , ,

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