Weekly thought on $IBIO, $INSG, $LRAD

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.

The SP500 began with a significant drop on Monday before bouncing back up to catch its breath.

I’m showing the daily SP500 chart above because it reflected the dynamic of the price action. Monday’s drop fell below the support of the previous historical highs (the blue line at 2940.91) as well at the daily 79 & 89 MA supports (blue & brown dash lines.) By Friday, price bounced back above the 79 & 89 MA supports but still below the line representing the historical highs.

At this point, one important question came to my mind, “is this a dead cat bounce?” We won’t know until next week price action continues the story for us. One factor I’m concerned is that the current price on Friday close is at the 50% Fibonacci (Fib) retracement from the recent historical high to Monday low. The Fib retracement alone may not be a strong signal. But the blue line above (line representing the previous historical highs) is another resistance that supports the Fib 50% retracement.

The above weekly SP500 chart showed more signals from a longer-term perspective. The blue resistance line representing the previous historical highs is more apparent visually. Meanwhile, the oscillators (the three technical indicators at the bottom half of the chart) are also reflecting an overbought situation. The top oscillator (MACD Histogram 12 26 9) has been showing a technical divergence against the weekly price chart since May (see the two thick yellow lines). And this week price action forced me to acknowledge this divergence.

Below is a cut/paste from investopedia.com explaining the “divergence” I mentioned above.

Needless to say, I’m concerned about the direction of the SP500 may take next week.

The reason I always start my blog with my outlook of the SP500 chart is that I am a staunch believer in the well-known phrase, “a rising tide lifts all boats, and a low tide lowers all boats.” Thus, I like to assess the general health of the broad market by analyzing the SP500 chart to make my determination. I’m by no means an expert, but I still need to protect my portfolio if I feel there is an imminent danger of a potential market correction based on my personal OPINION.

Having said all that, I reduced my position size on both $INSG and $LRAD to prepare for next week. However, I’m prepared to jump back in and pay the premium to add shares to these two positions if my concern is for naught.

$IBIO

It is my position that iBio is so undervalued at this point that it will have no material impact from the SP500 action. Besides, as I’ve stated in my last week blog, August is the month we may see the fruit of the work from Thomas Isett’s SOW, and the CFO’s “additional operational tasks.” Will there be a buyout, a merger, or a partnership from a BP? Stay tuned!

Furthermore, as more news came out to show that more biosimilar drugs are receiving approval from the FDA, the value of iBio CDMO becomes even more undervalued as price stays at this ridiculous level. Check out the latest news on biosimilar below.

The economics of biologic drugs published on August 8, 2019

  1. Economists & health policy analysts, including the Congressional Budget Office (CBO), have estimated BILLIONS of dollars in future savings from biosimilars
  2. Enactment of federal legislation & the finalization of accompanying regulatory guidance to permit biosimilars to enter the US market is the GAME CHANGER that allows biosimilar to proliferate.
    1. FDA already approved 23 biosimilars, and 9 have begun marketing in the U.S.
My comment
  • Item #1 highlighted the AWARENESS of the cost-saving in biosimilars at the Congressional level as well as the economists & healthy policy analysts.
  • Item #2 highlighted the enactment at the federal level, which included finalization of regulatory guidance.

In other words, the above two items clearly defined the supports available to kick off the inevitable proliferation of biosimilar drugs.

iBio’s plant-based tech can reduce the cost of biosimilar drugs even more; therefore it is a matter of time before the market re-discover the benefits as well as the advantages of using plant-based technology to produce biosimilar drugs.

Currently, it is my opinion that the market has NOT accounted for the potential behind the CC-Pharming deal. There has been no PR release to update the development that is going on at CC-Pharming in China since the news of the strategic commercial relationship back on July 9, 2018.

Not to mention that the follow-up news on October 2, 2018, regarding iBio and CC-Pharming to initiate the first stage of the companies’ business collaboration that included work on products, process, and facility design for a monoclonal therapeutic antibody product, plant-derived, bio-better rituximab, which has long been forgotten by the market.

Meanwhile, per iBio’s brand new website, CC-Pharming already built an 8,000+ square-foot pilot facility in Beijing using iBio’s factory design and is in the process of designing a large scale facility in China. Unfortunately, this valuable development is still under the radar.

Per Wikipedia, Rituximab, sold under the brand name Rituxan among others, is a medication used to treat certain autoimmune diseases and types of cancer. CC-Pharming plan to create a bio-better rituximab using iBio’s tech to offer an affordable rituximab to its patients from the world’s largest population.

If Jerry Wang, with a Ph.D. in Plant Biotechnology and Physiology, and as the CEO of CC-Pharming, sees the value in iBio’s plant-based tech, what is the odd of other scientists in the biotech community finding the same value in iBio? Perhaps, interests are already expressed, which necessitated the need for Thomas Isett’s SOW.

This is a Buy, hold, and wait stock.

$INSG

Well, earnings came out on Tuesday, and the revenues for the 2nd quarter ended up near the high of the 1st quarter guidance of $56 million. Actual revenues of $55.89 million also beat consensus revenues by $2.78 million.

The stock price took a dump on Wednesday to the low of $4.08 before bouncing back to close at $4.51. Guess what, the SP-500 5-minutes chart on Wednesday reflected the same pattern as well. Take a look at the 5-min charts below.

$INSG – 5 min chart on Wednesday, Aug 7, 2019 (below)
SP-500 – 5 min chart on Wednesday, Aug 7, 2019 (below)

The above two charts led me to believe that $INSG is now a stock that follows closely to the action of the broad market such as SP500. Therefore if the SP500 is going to fall further, my opinion is that $INSG has a high probability of falling as well. And this is the reason I have reduced my position size on $INSG on Friday because I fear another downturn on the SP500. However, I still have enough of a position (I also bought call options on Wednesday) that if $INSG is to gap up Monday, I will be fine. In a nutshell, I dialed down my greed factor. However, the exception to the logic of $INSG tracking the SP500 is when $INSG beats both earnings and revenues estimates by a wide margin. And I can see this happening in the coming quarters when 5G begins to expand by leaps and bounds.

Technically speaking
$INSG monthly chart

Unfortunately, instead of going up after earnings, the price turned downward. It created the long red bar reaching the multiple supports where the lower band of the flag, the 89 MA line, and the 15 MA line are. Giving that there are three technical supports at the $4.08 level, there is a good chance that the supports will hold as long as the SP500 does not fall any further from here.

However, the good news is that both the monthly 79 & 89 MA lines are turning up. That is a very bullish long-term signal, in my opinion.

LRAD

LRAD released news on Thursday, Aug 8th, “LRAD® Corporation Receives $14.8 Million US Army Award.” What do you know, by afternoon after the announcement, profit-taking began to kick in and continued on Friday. Since I’m sitting on a decent gain, the selling prompted me to take some profit as well just in case the SP500 take another negative downturn. However, I will be looking to buy back the shares if I feel the overall market is no longer bearish.

Earnings is tomorrow after the market close. There is a lot of expectation going into the earnings with the price reaching as high as $4.24 before profit-taking kicked in. If LRAD’s hiring of the VP of Software Sales is the result of increasing orders waiting to be finalized, the price may go much higher on Tuesday.

As in $INSG, I still have enough shares to participate in possible Tuesday gap-up. I only dialed down my greed factor last week.

Technically speaking

From the monthly chart above, the red bar that ended at $3.91 could be seen as a “normal” correction since $3.91 has significant support at the previous high at Sept 2014, which is the rim of the cup on the other end. If this support holds, the price will then have a high probability of bouncing from the $3.90 area back above $4 in no time at all. It is now up to the earnings result and conference call to determine which direction it will go.

Due to corrections on $LRAD and $INSG, my port gave back some more this week.

Current positions (in alphabet order):

Stocks = $IBIO  $INSG  $LRAD

Call Options = $INSG $TRXC

Up >15% YTD

My 2 cents

From my camera:



Categories: Daily trading Journal, trading journal

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