I’d like to start up my first post with a look at a hot sector for both Tendo and I:  Biotechs.  Labopharm is a company Tendo and I have been following for awhile now.  Labopharm enhances smaller-molecule drugs with their own patented release technologies and tries to strike licensing agreements with national and international pharmaceutical companies to sell their products.  They just got FDA approval for a drug of theirs called OLEPTRO, which is an extended release tablet intending on revolutionizing the anti-depressant market.  This was about two weeks ago.

When it was approved, the stock traded at around $3.40-$3.50 premarket the day after.  However, once the market opened up, the price got ripped to shreds and fell all the way to around the $2.20 range in one day.  Three days later, it was under $2.  Four days after that, it went as low at $1.53.

So why the huge drop for such a promising stock?

Truthfully, I love looking at the charts of stocks to see their support/resistance, but this one was a classic “sell the news” stock.  When Labopharm announced pricing for a $20 million public offering of units, at a price of $1.70 per unit (on Feb. 12th), the stock price opened at almost $.50 less than the previous day’s close, at $1.57.  Interestingly enough, another biotech, GenVec, who’s leading drug TNFerade is trying to get FDA approval for the treatment of pancreatic cancer, followed a very similar path a few weeks earlier when it offered 14mil units at $2/unit.

Check out GNVC’s chart and the peak on Jan. 25th, when the company had made their announcement.  The stock price fell and found support at around $1.76.  Less than a month later, the price is climbing again and is above the $2 mark that the buyers of those units paid.  These money infusers (those who had bought those shares) and new investors that see the potential in GenVec now see a buying opportunity and will push the price of the stock up.

Let’s look at Labopharm’s chart:

Very similar drop to that of GenVec’s.  Although the massive drop only happened a few days ago, I’m guessing support will go down to about the $1.50 mark (perhaps even $1.40 to be safe).  I feel like it will still recover in the next couple of weeks with a new wave of investors and those with these newly purchased $1.70 units wanting the price to go up.  Pay attention to see what this stock does until the end of February, and pay closer attention to the volume of the stock in the coming days.

Welcome Part Deux

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I’d like to welcome you all to the website as well.  As Tendo stated before, you all could probably care less about where we’re from, or what we do, or what’s our favorite color.  We’re all here for the same reason: to take a outside point-of-view and analyze the different trends we see in the stock market so that we can make some intelligent decisions and hopefully some decent monetary gains.  We have no problem sharing our thoughts on the hot items in the market today and even teach some of you some basic things about the market itself.  We’ll share our views and then re-evaluate them to see what we did right and what we did wrong.  You’re welcome to comment on our posts, but we do ask to be respectful of others and don’t act like jerks.  We all learn from each other, ya know….

+CTZ

For our first pick of 2010, I’ll start with what would appear to be a simple stock to swing trade.  JTX or Jackson Hewitt Tax Service.

News

JTX has recently come under attack the last few weeks over speculation about your typical mix of “bad news” PR statements.  First came a bank that cut off funding for one of its programs, then a story hits the wires about one of their employees being a convicted felon guilty of employing Ponzi schemes, selling drugs, and laundering money.  Couple in the recent downtrend of the market in the last few weeks and this all screams “panic selling”.

Technicals

I’m willing to bet that in a few weeks when this negative buzz settles down this stock will be back to trading around its 50 day MA at 3.97.  Last week in particular saw a new bottom forming around the 2.00 level as evidenced by the narrowing trading range around Feb 9th and 10th.  In the very short term, I wouldn’t be surprised to see a quick return to the 2.70 range.

JTX 3 month chart

History

Historically JTX has done extremely well each year around tax season.  I like the added upside on that alone to ensure that this bounce occurs.

Events

Earnings will be announced on March 11, 2010.  This will set the trading duration on this stock to be about 4 weeks.


JTX 1 year chart

Welcome

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I’m going to keep this first post short and sweet.  You’re not here to listen to me ranting about my life and experiences.  You want to make money just like we do here at O&T Investments.  After studying the market for the last few years we’ve already achieved a #1 ranking on covestor.com for concentrated portfolios.  Yes, I said small portfolios but don’t let that fool you.  When we started stock trading at O&T we were nothing but kids out of college trying to make a few extra bucks with graduation money.  With simple charting formulas and an attention to news and momentum we believe we are on to a new winning strategy in today’s oh-so-volatile markets.  The best way to prove it is to post our daily due dilligence (referred to from here on out as “DD”) to this blog for all to see.  Take it as you will, but we believe that we are onto something here and think all smart investors out there like yourself should reap the benefits.  With that said, welcome to the blog and expect the news to begin flowing this Monday.  Yes I know its a holiday, but the letters O and T stand for “Overtime” – cause we put in that work for you.

+Shawn Tendo (call me “Tendo” for short)