Before you read on, please be aware that the analysis below is my opinion only and may include flawed assumptions and inaccuracy of logic; therefore, caveat emptor applies here. Furthermore, all emphasis (color-coded, boldness, and underlined) on the excerpts are my own.
This week, the bull said they are not packing up the bag yet because they’re still going to go up. Fine by me!
Meanwhile, I made some changes to my portfolio due to unforeseen events such as price action ($CGC, $KNDI) and a new perspective ($AMRN).
I got out of $CGC not too long ago because I thought there would be a correction before the next leg up. Since I didn’t know when the correction would come, I resorted to day trading $CGC if I saw opportunities for a bounce. Thursday big down day surprised me even though I had expected it. From the daily chart above, I expected the price to settle at the Fib 38.2 retracement around $44.30 if a correction was to come. So when the price started to drop on Thursday, I placed buy order at $44.30 and got filled. But the price closed lower and went even lower in the after-hours market. Undaunted, I added even more in the next day pre-market when price traded below $43. I found it much easy to add pre-market under $43 because I just clicked on the ask when it showed up at the price I wanted. But once the market opened, the price flew all over the place with such volatility that my market order didn’t get filled until about a few minutes later. Price eventually bounced back, but price closing above $47 was better than I had expected. With an average price of $43.xx, I’m more comfortable holding it a bit longer for another leg up to meet October 17th when the Canadian market opens up for adult use of cannabis. As far as I’m concerned, a strong rally needed a healthy dose of correction before it can continue higher, and we got one this week.
$AMRN took a dive this week due to a hit article from Seeking Alpha (SA) predicting a failure in the Reduce-it trial. The article, “Why The REDUCE-IT Trial Will Fail,” regurgitated old information that formed the basis of the FDA’s rescission of the ANCHOR clinical trial Special Protocol Assessment (SPA) agreement. The main argument being that triglyceride (TG) lowering is not associated with the reduction of major cardiovascular events. On the day of the hit article, my faith in the Reduce-it trial remained steadfast. However, on the following day, as I read the comments below the hit article to get a sense of feedbacks and reactions, an issue related to the diet change in the patient population began to pique my curiosity.
“What if the patient population did not change the eating habit during the trial?”
Per Amarin, “Vascepa® ((icosapent ethyl) capsules, a therapy approved by the U.S. Food and Drug Administration (FDA) as an adjunct to diet to reduce triglyceride (TG) levels in adult patients with VHTG, the severe (≥500 mg/dL) hypertriglyceridemia patient population studied in the MARINE trial, is now available by prescription.”
And as part of the Reduce-it trial, “Patients enrolled in the study have elevated triglyceride levels and at least one other defined cardiovascular risk factor.”
An adjunct to diet, sound to me, is that the patient population must also partake in changing their diet for the better. By removing the culprits in the diet that caused the patient to have high TG level as well as at least one other defined cardiovascular risk factor, the patient essentially stopped the excessive Omega-6 oily substances, sugar, and salt from impairing the body so that the EPA in Vascepa could work on repairing the body. It is also my 2 cents that because both the Marine and Anchor trials took 12 weeks to complete (or three months), the relatively shorter length compared to the multi-years Reduce-it trial made it easy for the patient population to stick to the new diet for the duration of the 12 weeks.
Upon this new perspective that I had not thought of before, my concerns became a series of questions I listed below:
- Did the Reduce-it trial require a specific diet change?
- What was the patient population attitude toward a healthy diet change? Were they expecting that Vascepa would fix their weak heart without having to change their diet?
- What if only half of the patient population stuck to their new diet? (I think I’m generous to assume half of the patient population stuck to the new diet)
- Assuming only 50% of the patient population stuck to their new healthy diet, what if this 50% of the patient population fell heavily, by randomness, on the placebo group?
If the placebo group carried more of the patient population with healthy diet change, would it be enough to offset the Vascepo group who stayed with their unhealthy diet? Healthy diet change could have a significant beneficial impact on the heart even without Vascepa, so reduction of major cardiovascular events was also possible.
All the above What-if questions suddenly raised my level of doubt regarding the success of Reduce-it trial to the point that the bet becomes more of a casino bet. Then I asked myself about the size of the Amarin call options I was holding, “Would I be betting this big in the casino?”
Needless to say, I closed all my Jan 2019 call options and hold only a smaller percentage of the Jan 2020 call options. At least, the Jan 2020 will give me another year for Amarin to recover in case the result is only “ok.”
Remember, the above logical deduction and assumptions are my own opinions only, and I could be wrong. So take it with a grain of salt. I’m dialing down my bet based on my personal change in perspective.
$KNDI spiked up with high volume on Friday, and it gave me the “head-up” to jump back in even though price traded near the high of the day by the time I discovered the spike-up. To me, the coming proliferation of electric car in China is like the coming proliferation of legal cannabis worldwide. Recent successful IPO of $NIO would be like Constellation Brand investing $4 billion into $CGC; a spark that is going to wake up the investment world that electric car is going to be in the future of China soon. Take a look at the monthly $KNDI chart above. The three yellow oval shapes highlighted the powerful price support at around mid-$4 since 2012. And with Friday spike up, $KNDI broke through the recent downtrend (blue) line.
Fundamentally speaking, I think Kandi’s concept of swapping the battery instead of charging the car while parking is the primary factor that will make their low-cost EVs more practical for everyday average Joes. Not everyone who could afford the Kandi EV has a garage to park and charge. Most of them are likely to park their Kandi EVs on the streets. Therefore, the most practical solution will be to go to battery swap station (instead of the gas station) and swap the battery. If this concept is adopted nationwide, which I believe (aka my 2 cents) it will, Kandi stock will soar and never look back.
Despite the shorts’ skepticism on Kandi which I also harbored some, why I still like Kandi is the fact that they are still around (much to the short sellers’ chagrin) making EV cars. In other words, their longevity in the EV business allows Kandi to accumulate a wealth of political as well as industrial network and experience that would enable them to move quickly once China begins to adopt an accelerated program to push EV cars into the market. When will that happen? I genuinely don’t know, but given the negative impact of global warming, I can only speculate that it is better to be sooner than later. Hence, my bet. Just by looking at the monthly support (from above monthly chart), I feel confident that price will stay above $4 even if it doesn’t go up to $6 by the end of the year.
I got back into $MARK again because I like the price action on Friday when it bounced above the MA 5 support. I’m expecting this little bounce will evolve into a more significant bounce. But for this to happen, $MARK needs to generate some good news soon.
$LRAD did a good job holding its ground to stay above $3. Despite news this week of additional mass notification sales, “LRAD® Corporation Announces $1.0 Million Mass Notification Critical Infrastructure Order“, price did not rally.
Below is an excerpt from the news which I believe is very important but is ignored by the market.
Danforth added, “This competitively won award is part of a potentially larger program to provide a standard, unified mass notification system for this region’s populated areas, and to speed disaster response and recovery.”
While this is not a very big multi-million deal yet, it is definitely a “warming up” phase per my 2 cents. However, I believe once the quarter ER is announced, the price will wake up and bounce hard.
$IBIO also did a good job maintaining its ground at 85 cents. I believe it’s a matter of time before we hear more news regarding more contracts and/or filing of IND for its IBIO-CFB03 for the treatment of systemic scleroderma, idiopathic pulmonary fibrosis, and other fibrotic diseases before the end of the year.
$AEMD is stabilizing at the dollar level. The power of their hemopurifier is good enough for me to sit and wait out the FDA response.
Due to loss on closing out a big chunk of my $AMRN call options and lower prices on $LRAD, my port gave back some.
Current positions (in alphabet order):
AEMD AMRN CGC IBIO KNDI LRAD MARK & cash (up 28.9% YTD)
My 2 cents
From my camera: