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.
Whoa! How could I miss that? Did anyone see it coming? It’s a big wallop of a drop in the SP500, and it happened in a stair-step fashion that you wouldn’t know it was a big drop until you realized it was a big drop. By then, it was too late to do something about it- like buying $SPXU or short the SP500 future. A plan of action to this sudden event must be prepared for a more possible downturn. But then we will not know if there is going to be more downturn next week. There could be a bounce or price consolidation ahead. The 4.1% drop this week on the SP500 effectively brought back the possibility of a double-top scenario. Two major supports are keeping the bull intact if they can hold. The first support comes from the channel (three brown parallel lines) containing the multi-year uptrend. This week drop closed above the lower channel (see first blue arrow), so it was a good save. But we will have to see if next week will bounce or take out the lower channel (1st support) and then, in the worse case scenario, the 2nd support where the weekly 79 & 89 moving averages are. If the 2nd support is pierced next week or weeks later, it will not bode well for the broad market overall. Hence, it is important that I made a decision Friday regarding my $TRXC and $KNDI positions. I bought back $TRXC after the announcement of receiving FDA 510(k) clearance for its 3mm diameter instruments. Yet, despite this groundbreaking news that will separate the Senhance from the Da Vinci as a robotic-assisted surgical device (RASD), the price could not hold. Because I bought in size (relative to my portfolio), I must exercise precaution sooner than average even at the risk of missing a run on both stocks. This is not the first time I allowed my fear of broad market crash derailed me from my plan. As far as I’m concerned, the possibility of a broad market crash should be feared and respected because when it happens, it won’t wait for anyone.
The decision I faced on Friday is not unlike the one I made with $AMRN before the Reduce-it trial result annoucement. “Should I unload some position to raise cash and risk missing a nice bounce?” Before market close, in the name of safety to my portfolio, I decided to sell most of my $KNDI and $TRXC to raise cash and hold only $IBIO, $LRAD, and $AEMD. The latter three I have committed to holding because they are stocks that do not support active trading. These stocks are meant to be held for the ultimate catalysts because they are difficult to buy back at your selling price once you sold. Also, just because I fear a market crash doesn’t mean there is going to be one. I’ve been wrong enough times, but I must do what I need to do to protect my portfolio. Here is a trader’s truism that always keeps me on my toes- missing an opportunity is just that, a missed opportunity; there will always be another one coming sooner or later; however, losses, realized or unrealized, are a setback that required more time and effort to restore to formal balance. While losses can never be entirely eliminated in the investment world, we can always do our utmost to keep it small as much as possible. It’s like business expenses you don’t want to be out of control.
Why I’m holding $IBIO, $LRAD, and $AEMD and not $TRXC and $KNDI? In a nutshell, both $TRXC and $KNDI, despite my belief that they will both do well in the future, are relying on proof of future revenues in the next few quarters to support the rising price. To me (aka my 2 cents), there is no urgency to hold when the possibility of a broad market crash is on the horizon since I can always buy back even at a higher price. Meanwhile, $IBIO, $LRAD, and $AEMD have catalysts that can propel the stocks just on breaking news alone regardless of broad market condition.
Below are the catalysts I expect to see for the three stocks:
$IBIO – according to the FWP report in SEC filings,
We should expect to hear about:
- The Filing of IND for its lead therapeutic candidate IBIO-CFB03 for the treatment of systemic scleroderma, idiopathic pulmonary fibrosis, and other fibrotic diseases.
- According to the table above, Phase I should start near the end of the year; thus the filing of IND announcement can happen any day in the 4th quarter.
- Since the CC-Pharming contract fulfilled the first two items on the table related to new CDMO contract and collaborative product development agreement, there is no reason to doubt that iBio will not fulfill the rest of the projected milestones.
- Notice that the plurals in the CDMO contract(s) and collaborative product development agreement(s); thus we could be hearing more news on this regard before the year is up.
The above and the plant-based tech is all I needed to hold on to my $IBIO.
$LRAD – I’m waiting for the news on the city-wide sales of their mass-notification systems. It’s the one catalyst that will trigger an upside for this stock since such sales can trigger interest from other cities to follow suit. $LRAD is also not a good trading stock because it is hard to buy back shares without moving it back up. Their long-range acoustic devices are also getting traction from military, national guard, coast guard, border patrols, etc. As far as I’m concerned, our current climate as a result of global warming is the perfect time to reap the benefits that LRAD’s technology has to offer.
$AEMD – Their hemopurifier is the reason I’m holding this one. Viruses and exosomes removal using its hemopurifier to treat infected and cancer patients respectively are where the future money is. It’s a buy, hold, and forget.
By the way, per my 2cents, all three of the above ($IBIO, $LRAD, and $AEMD) are all undervalued; so, I don’t think any broad market downturn is going to take them down as much as the other overvalued stocks.
As the old sayings go, the market gives, and the market takes as well. This week, the market took back a chunk of my paper gain and some cash from my poor timing in the purchase of $TRXC and $KNDI during the week.
Due to drawdown from $IBIO, $LRAD, $KNDI, and $TRXC, my port gave back 12% for the week. Yuk!
Current positions (in alphabet order):
AEMD IBIO LRAD & cash (up 22.1% YTD)
My 2 cents
From my camera: