Browsing Posts published by Tendo

The last few months have been a bit grueling. Work, Holidays, Dates, Travel, etc. Regrettably there hasn’t been too much time to study the market. I made a a couple plays during the end of 2010 but they were all big losers (CSCO Jan ’11 Calls, GRYE mostly). I disobeyed the #1 rule of trading IMO – ALWAYS DO YOU OWN DUE DILIGENCE. I made one pick based off of a pump and dump Newsletter and another off of a hasty reaction to a earnings report. ALWAYS DO YOUR OWN DUE DILLIGENCE – can’t stress it enough when making stock picks. Just because you read something somewhere that says a stock has a target of $20 when it currently trades at $12 doesn’t mean its going to get there. The information is only as good as its source. Trust yourself with your decisions and learn from your own mistakes.

With that said – CTeezy and I finally found some time to sit down and crunch through some stocks last night. January is one of our favorite months to trade because, much like your local mall, many items can be had for bargain basement prices. A lot of stocks get sold off towards the end of each year for tax purposes. Short sellers know this occurs and pile on to drive stocks down even further. No big deal to the longs though, they get a bigger tax break by selling before December 31st then just have to wait 30 days to buy back their shares at lower prices the following calendar year. Its like riding a ferris wheel 2 times but only having to take the big drop once…

Ok enough blabbing – here are your “2011 Bounceback Canditates”:

GAPTQ – The Great Atlantic & Pacific Tea Company

My favorite pick. We’re talking about a small grocery company founded in 1859. Places like this usually find ways to make it out of hard times. Either that or they merge with another medium sized company (a la the Kmart \ Sears merger). Down over 90% after filing for Chapter 11 bankruptcy back in Decmeber, the company is now in stages of restructuring. They may close some stores but should still make themselves attractive enough to get by. Rumor is they’ve made some bad decisions in the past that , if corrected, will save the company a lot of money. Either way, I like the chances of this stock to rebound enough to warrant a recovery.

CNST – Constar International Inc.

The name of this company should be the name of the newsletter that recommended its readers buy GRYE last November … but actually Constar may be able to bounceback in 2011. Constar is in the packing industry and recently have filed for bankruptcy. They’ve already been told by the NASDAQ that they would be delisted on January 20th and I’m waiting for that to occur before buying. Constar hit a new 52W low of .42 on January 18th. I may wait a few more days to see if it bottoms out further once it hits the OTC or Pink Sheets.

ESLRD – Evergreen Solar Inc.

Another company beaten down recently the last 6 months. Any investor that bought this stock last year hoping to catch that next “green solar stock” probably suffered some losses so why not sell, lock in some losses then buyback in 2011 for less. Not like green technology has really taken over yet, right? I like this one as a quick runner back too the $6s soon … Solar companies are going to keep getting tax cuts as long as our government keeps pushing for alternative energy solutions

Note: I may be long, short, or hedged with any of these securities at anytime. I post my thoughts here as a learning tool for myself and hopefully others too. Always do your own research before making your own trades!

Bounce Play: NGAS (Ngas Resources)

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Looking for a risky bounce play? Keep your eyes on NGAS (Natural Gas Resources). After announcing widening Q3 losses shares plummeted to a new 52-week low of .35 during trading on November 10th. This price also represented the lowest price the company has seen in the last 5 years. Can’t say I’ve had time to do my due dilligence (DD) to figure out the cause of this drop as of yet, but I will in time. All I know is that anytime a NASDAQ stock with a long history and a 50 day MA of .73 makes a significant drop on the heels of an earnings announcement I’m ready to buy the fear make back a few bucks. I’m going to be watching the action on this one very closely the next couple of trading sessions. If we see a continued drop tomorrow I will hold of and wait till a new bottom is formed. At the first sign of a turnaround I may look to scoop up some cheap shares and maybe snag a quick 10-15% gain.

NGAS - 3month chart (11/10/2010)

NGAS - 3month chart (11/10/2010)

* Note – There is a rumor that NGAS may be mulling over a sale of some or part of the company. This could be good or bad news for the share price depending on the deal that is struck.

Medical Marijuana Inc Successfully Launches Product Sales With Over 3200 Distributors in The Hemp Network

The first domino in the MJNA play has fallen … softly. “The Hemp Network”, although originally planned to launch in early August, has completed the soft launch and is now offering the first line of “Nature’s Ancient Wisdom” products to customers. It is rather encouraging they were able to attract 3200 potential distributors from all around the United States for this launch. Not a bad start for a new division of MJNA’s business.

What I’m really waiting for though is the upcoming Prop 19 vote in California on November 2, 2010. I’m not so sure the vote will pass this time around but as long as the rejection rate is better than it was in 1973 (66%-33%) I think there could be an interesting future ahead for this company.

On a purely technical side, the MJNA chart is once again sitting near the 50 day moving average. Thursday’s trading session saw unusually high volume just as the stock moved below the 50 day moving average. To me this signals the start of another move. As the vote nears, the news will begin call more attention to the ballot and MJNA may get some movement. One to keep an eye on for sure. Wouldn’t be surprised to see a climb to the 200 day moving average of .15

For those of you that follow my trades on Covestor you may have noticed that in late August I purchased shares of LQMT (Liquidmetal Technologies). CTeezy made mention of this purchase in early September. I have to admit, I’m actually really upset I didn’t find out about LQMT back in early August when shares could be had at a paltry .28 per share. At that time, LQMT was a company with a revolutionary idea, a lot of debt, and no real marketable products. Enter new CEO, Thomas Streipp, a leader with 30 years experience growing global technology companies. Streipp had been running long time tech company Symmetricom (SYMM) from 1998 to 2009 before joining LQMT. Sounds like he put his connections to good use right away as a quiet SEC 8-K filing was issued which announced that LQMT had entered into a Master Transaction Agreement with Apple Inc (AAPL). In exchange for a large license fee LQMT would essentially grant Apple exlucsive rights to the liquid metal technology in the consumer electronics field. Interestingly, the wholly owned subsidiary is called the “IP Company”. Hmmmmm what do we know that begins with “IP” and is associated with Apple?

Yeah. Just about every product begins with “IP”. iPods and iPhones and iPads oh my! It’s no secret that the world loves Apple products as evidenced by the millions of iPods seen being toted around each day (when I last checked Apple had sold over 110M iPods since the device was first launched). The true Apple geeks of the world especially got excited about this news. That’s why when word got out that Apple was interested in something called liquid metal, the internet blogosphere lit up with questions as to what Apple may be trying to construct. Maybe their own T-1000?

Ok, maybe that was just me, but I do believe most thought that this technology might be used in future models of the “IP” prefixed devices. Whenever sites like Gizmodo and Engadget pick up on this kind of news you are bound to attract some excited investors. It should have come as no surprise then that LQMT saw its share price rise about 500% in a matter of days. Who really knew what Apple was up to?

Almost as quick as the stock rose, it fell – as it should have – once the initial buzz of the news with Apple wore off. I, personally, was happy to see the drop because I had completely missed this initial runup. I waited for the chart to settle down a bit and ended up picking up some shares at .65 (a bit early) and later again at .56. To me it almost seemed like in the DAYTRADER’s mind this stock was just another pump and dump scheme. How many times have we seen the old, “throw a big tech company’s name in with the name of a small tech company’s name and attract buyers” trick. Normally one would think the fun is over, but despite this sell off the non-trader/geek world still remained abuzz wondering what may be in store with this new revolutionary material. As such the stock price has slowly begun a climb back to the .80 rang. The fact that this seems to have generated all of this buzz makes me think that we could see another run if any news is leaked regarding Apple’s involvement with the company. It is for this reason, that I’m speculating on LQMT as a potential breakout play.

I must say though, despite that fact that I am extremely bullish on this stock, it does carry with it IMMENSE amounts of risk. I mean, this company is trading on the pink sheets for a reason. I wouldn’t be surprised at all if Apple simply bought the rights to this material to keep other competitors away. Why chance someone coming out with a lighter version of an iPad or iPhone? Apple could just as easily cripple LQMT in the consumer electronics market as they could make them.

Additionally, as is common with stocks that rise very quickly in price, we could see some dilution coming at some point. This could send the share price right back to the .28 cent level that was seen for most of 2010.

All in all, I find LQMT to be one of those companies worth taking a small gamble on. I can’t even begin to guess what my target price would be if some large deal or buyout were to happen but I’d have to say that $1.70 per share could end up looking like a bargain in 2011.

It’s been awhile since I’ve posted any new stock tips here, and for that I once again apologize. However, after a few boring months of not finding any interesting plays I think I’ve finally figured out the best thing to buy – Medical Marijuana! No, I’m not suggesting you go out and buy yourself an ounce of some “Bubba Kush“; rather, I’m talking about picking up shares of Pink Sheet stock MJNA (Medical Marijuana Industries).

So what does MMI do? Well, per the MMI website, they have “developed a suite of solutions to deliver an efficient and secure infrastructure for the Medical Marijuana Industry which provides the tools to industry operators to effectively manage their business with the confidence that they are in full compliance”. So essentially they have learned the ropes before anyone else and can offer any company wishing to enter this growing industry a turnkey solution to speed up production.

Before you jump all over me for suggesting an investment in such a controversial company just think about it for a second. Currently in the U.S. 14 states have legalized medical marijuana. In California, the medical marijuana industry is worth over $2 billion dollars alone. Now, add to this fact that California will be voting in November on the possibility of legalizing Marijuana for all California residents aged 21 and over and you have a powder keg of a business ready to explode.

No matter which way the vote goes, I have a gut feeling that MJNA will get some looks from other prospective buyers looking to get their foothold in what could end up being a very very profitable business in the next few years. Even more notable is that MJNA is preparing to launch “The Hemp Network” before this vote takes place and is also planning on hosting a large event at the Pontiac Superdome in Detroit in October. All of this means that MJNA will be getting more looks as we get closer and closer to the November California vote.

At .07 per share (at end of the day on Thursday), MJNA is sitting just above the all time low right now which makes it a very risky play – but one that could pay off HUGE if things play out well over these next few months. I wouldn’t recommend betting your entire life savings on the company, but like the chances of MJNA to begin an upward trend from here.

MJNA 3 mo chart

I don’t really think you can rely on a chart to determine price action on this one, but if you do, MJNA now sits right around the 50 day moving average. A break of this moving average could signal a significant breakout and a run to new “highs” (had to say it).

I’m treating this play as a long term buy and hold. I’m sure rapper Lil’ Wayne would approve of this stock purchase:

I’ve enjoyed the last few weeks of being completely free of any holdings in the market. With all of the crazy up and down days, bills passing in the senate, oil going up, dollar going down, you name it – for small time investors like me – there’s too much that I don’t know (and really don’t care to know) about how my stocks are going to fare. What I do know is that this is a time when relying on some very basic fundamentals helps in timing when to start buying stocks again. Take a look at the DOW over the last 6 months:

Any basic trader needs to know about basic support and resistance when it comes to buying stocks. Think of support as the next closest bottom based on the stocks current trading range and resistance as the short term maximum. Typically you buy near support and sell near resistance. Simple enough right? Normally its a very safe technique for picking individual stocks, however, when the entire market is in a severe downturn like what we’ve seen the last couple of weeks you must take a step back and analyze the ENTIRE market and now just individual stocks. The DOW has dropped about 1000 points in the last month (-8.87%). Not surprisingly, many individual stocks are down anywhere from 5% to 20% over this same time period. The market as whole operates on fear, greed, and uncertainty. When fear is the #1 sentiment of the market its easy for many stocks to become oversold as panic sellers will cause margin calls and stop losses to be hit prematurely. This is why we see these huge point swings from day to day.

Alright now I’m just rambling a bit here. What I’m trying to say is that using the support and resistance of the DOW you should be able to find out exactly when a good time to start buying again may be. It should stand out that back in February the DOW dipped below 10000. This should be a sign that MARKET SUPPORT occurs when then DOW is at or around 10000. I was talking to CTeezy on Thursday about when I thought it would be a good time to buy:

1:24 PM me: market’s gettin close to 10k
1:25 PM me: might be time to buy this Friday
1:25 PM CTeezy: ya i saw. ddss is sucking too
1:28 PM me: i mean everything is going to be dragged down as the market goes down
1:28 PM me: its all about finding the bottom for the market and the stocks which have been oversold
1:28 PM me: like – if the DOW is down 8% … find stocks that dropped more than 8% over the same time period
1:29 PM me: cause those are ones which should end up rising with the market
1:30 PM CTeezy: that’d be a great post for ot
1:41 PM me: [talking about weekend plans]

A few minutes later I began looking for some potential oversold candidates and stumbled upon PEIX:


1:45 PM me: PEIX
1:45 PM me: watch that one
1:45 PM me: your bread and butter
1:45 PM me: oil stocks
1:45 PM me: looks oversold
1:45 PM me: http://www.google.com/finance?q=PEIX
1:46 PM me: its down like 50% in a month
1:46 PM me: as soon as market perks up and oil prices start going up it’ll be right back there i think
1:46 PM me: they reported a loss a few days ago which is why tehre was a big selloff
1:48 PM me: support is at like .36 and .69
1:46 PM me: right now its in no mans land at .63 mostly due to the DOW falling
1:54 PM me: http://www.wikinvest.com/commodity/Oil
1:55 PM me: oil price chart correllates to PEIX chart
1:55 PM me: just like Aluminum prices and CENX
1:55 PM me: when oil rises, PEIX rises

Interesting to note about that conversation is that PEIX spiked as much as 48% on Friday. I’m kicking myself for not picking up some shares. I just so happened to be in meeting at my real job this morning when the DOW dipped below 10000 (my signal to buy). By the time I got back to check, PEIX was already shooting to the moon. Like I said – it sucks being right sometimes.

However, this mental victory has given me back some confidence that there are other stocks still oversold right now. Also, the DOW rallied to start the day on Friday but as I look now, it seems like the rally is fading and we’re heading back below 10000 again. I wouldn’t be shocked at all to see the DOW plunge back to 9800 or even 9500. I’m just keeping all the powder dry to load up when the timing is right. I’ll do my best to dig up some potential buys for next week.

Dow drops 1000 then bounces up 600

This picture basically describes it all. Dow dips below 10,000 by dropping over 1000 points then less than 30 minutes later it has bounced back about 600 points. I wish there was some way I could explain this but I don’t think anyone knows what is going on. As a swing trader I always operate on three main principles – Fear, Greed, and Uncertainty. Right now I’m feeling just about all three of these emotions. The big hit that I took on GNVC a few months ago actually turned out to be a blessing in disguise as it scared me into selling off all of my remaining holdings in the market. So for today I am happy to say that I wasn’t holding a single stock during this chaotic “Black Thursday”. My condolences to all of you who fell victim to the manipulation that took place today. I’m sure some market makers out there made a killing today.

So what to do from here? My first thought is that I should give up stock trading altogether and just focus on trading foreign currencies but I don’t think I have enough time away from my full time job to do that. My second though is that this huge drop is going to spark a lot of fear – especially with individual investors. I’m sure a lot of stop losses and margin calls were triggered today which may have artificially lowered stock prices below where they should have been. I’d say find some companies with proven track records and load up some shares as the market settles and look to make back some of that money that was lost today. Could we eventually see the DOW drop below 10,000 again? Maybe. I’m going to stick to a few stocks that I know and just pick up some cheap call options right now while they are at bargain basement prices. June ’10 Call options on CENX are looking mighty tasty right now …

Oh and just another side note: The main reason for the lack of posting this last month was that both CTeezy and I have had an extraordinary amount of actual 9-5 work taking up most of our time these days. As I said before, I sold everything I owned and just took a break from the market – this is something I would recommend for everyone at some point during the year.

O&T vs. GNVC in Pictures

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All I can think when I watch this clip is that the stock market is like Stanford and I am Dee Dee Jernigan of Xavier. I was given two great opportunities to exit my GNVC trade above $3 but missed. However, the worst outcome at the time seemed like it would just send the game into Overtime. But Stanford (the market) took the ball down the court in 4.4 seconds, something that most would say would never be possible, to win the game (Just like I never thought a discontinuation of TNFerade was not possible). Like Dee Dee Jernigan, I’m absolutely sick over this loss, but it has only made me hungrier to win. You can bet your ass O&T is going to rebound from this one. Get it? Rebound.

To say that I was completely shocked by the news that GNVC released after hours on Monday would be a titanic understatement.  I’ve been holding shares of GNVC since the summer of 2009 and was consistently impressed with the positive news coming out of this tiny biotech company.  TNFerade looked like a promising new treatment for several different types of cancer, deals had been signed with biotech giant Novartis, and several fully funded vaccination programs were in the pipeline for 2010.  There really wasn’t much NOT to like for a company trading at under a buck per share.  The real big news started hitting the wires in January of 2010 and as it did, the stock price reflected investors positive outlook on the company.  For the past three weeks, the stock showed great strength trading above the $2.70 level which affirmed that the $28 million dollar stock offering back in late January was well founded (shares were sold for $2.50 each).  Based on results from a TNFerade trial for esophageal cancer in January in which the drug significantly extended the lifespan of its patients and a recent article describing how TNFerade suppresses the metastases of certain cancers it seemed like a slam dunk that TNFerade for pancreatic cancer would prove to be effective.  I had NO REASON to believe that the company was going to fall below $2.50 per share in the near future.  Reluctantly, I sold roughly one third of my position in GNVC shares during each runup of prices into the $3’s but held the other two thirds for the imminent release of the Phase 3 data for the PACT trial for TNFerade’s treatment of pancreatic cancer.  About the only news that would really tank the stock would be some kind of catastropic reporting that the drug was either not effective or not safe for human use.  But there was NO WAY that was going to happen right?

WRONG!

After trading hours closed on Monday I was greeted by the worst possible news that GNVC could report – “GenVec discontinues Phase 3 Trial Testing of TNFerade

OUCH!

Based on all of the previous positive news bytes that had been reported over the last 6 months, this news completely floored me.  My first reaction was, “F@(#)!(#* I just lost a ton of money”.  But my second thought was to read in and really find out what went wrong.  Turns out, GNVC isn’t completely abandoning TNFerade as a product.  They are simply shutting down the trial for the currently INCURABLE pancreatic cancer disease.  Obviously any daytrader or small-time investor with money is going to see this news and immediately sell but if you really think about it, the chances that this treatment would do anything different for a type of cancer that metastasizes.  I realize it may sound like I’m just trying to justify my poor decision to not sell any more shares of the company before the news came out, and maybe I am and just don’t realize it, but I know that I’m not the only one that made this mistake.  Furthermore, GNVC still has TNFerade trials lined up to tackle other forms of cancer including esophogeal, head and neck, and eventually prostate cancer as well as the previously mentioned vaccination and hearing loss treatments so long term I still have reason to believe this company will do well – its just going to take a while.  However, due to the fact that the companies most profitable opportunity to market TNFerade has been discontinued I’m going to re-adjust my target back down to about $1.20 per share in the short term.  About the only saving grace that could bring GNVC back up to the $2 range would be a buyout by a bigger biotech such as Novartis.   I have no idea how mergers and acquisitions take place in the biotech world, but it would appear that GNVC could be a bargain right now for any struggling giant looking to acquire a promising technology.

All in all, I’m taking this as a very important learning experience.  My biggest mistake trading GNVC was the fact that I didn’t sell half of my shares when I thought the share price had reached its peak.  My original target on the stock was $3.00 and when it hit that price I only took one third of my shares off the table.  I let greed and my cockiness get the better of me and instead of thinking about the potential losses I might incur holding those extra shares, I thought about the potential gains I would lose if this stock pulled an HGSI and shot up 200% in a day when positive news was announced.  Like any successful person will tell you, it always pays to experience some adversity before you can truly succeed.  I feel fortunate that the only losses incurred when trading GNVC were paper losses since my initial investment was covered long ago when I took those first third of shares off the table.  The market is a very unforgiving place and if you don’t take the profits when you have them they can be taken right back from you in an instant.

Apologies for the lack of posting the last few days.  I’ve been spending a lot of my time the last few days finishing up my taxes for 2009 and let me tell you, once you start making some serious coin trading stocks, it is important to remember that every capital gain that you make WILL get taxed.  A smart move is to just set aside 30% of each gain that you make so that you don’t get blindsided come tax season.  Anyways, now that everything is taken care of – here’s a quick update on the stocks that I’m currently playing:

  • GNVC (GenVec) – Currently my home-run hitter in my portfolio.  CTeezy talked a  bit about GNVC a few weeks ago but truth be told, we’ve been following this company for quite some time now.  In a nutshell, GenVec is currently in Phase III testing for a revolutionary new cancer treatment called TNFerade. Studies have shown that TNFerade successfully suppresses the metastases of cancer and as a result can increase the lifespan of anyone stricken by the disease.  Interim data on the PACT trial (pancreatic cancer) should be released within the next few weeks.  The last time results were announced back in January the stock price shot up to the $3.30 range.  If similar news is announced this time around, we could see new highs in the $4 – $5 range.
  • DDSS (Labopharm, Inc) – Another stock mentioned by both CTeezy and myself.  Less of a homerun hitter than GNVC but more of a play with some guaranteed upside.  Labopharm recieved approval for its anti-depressant OLEPTRO.  At a conference last week in Boston, the president of OLEPTRO seemed very excited about the possibility of finding a partner to begin producing and marketing this drug in the U.S. at some point this year.  Shares were offered earlier this year at a price of 1.70 per share so its only a matter of time that we begin to see the stock price rising.  The day that a partnership is announced should be a good day for any owners of DDDS.
  • CDII (China Direct Industries, Inc.) – Mentioned as a momentum play already, CDII has taken it sweet time getting noticed by investors.  I’ve picked up some shares around the 1.57 level as I believe this to be the bottom for CDII.  Rumor has it that they have agreed to sell off 90k shares of CNAM which was up huge last week.  Once this connection is made (or once CDII puts out some PR to talk about these gains) we should see this begin to climb up to $2 per share
  • PESI (Perma-fix Environmental Solutions, Inc.) – Wasn’t even on my radar until last week when they reported 4Q earnings results with revenues increasing 20.8% to $28.4 million.  In today’s economy, huge jumps in revenues like this don’t seem to come by very often.  Shares peaked around $2.50 the day these results were announced and I felt fortunate to pick up some shares on the pullback.  Looking at the 5year chart, I can see that PESI was once trading in the 3.00 range back in 2008.  With revenues higher now than they were back then, it only makes sense that this stock is still undervalued.  I’m targeting $3.00 on PESI over the next month or so.