Portfolio Update - 10/15/10

Netlist broke out again yesterday, moving out of that large wedge pattern I've been tracking. I added back the half position I sold on Wednesday at more or less the same price when it became clear the stock was going to head north again and am holding the full position over the weekend.

The price is very likely to pull back within the upper bollinger band soon so I will probably look to take some or all off the table if there is a spike at the open on Monday. But I'm still eyeing this as a swing trade again as we head towards the Interop conference next month where NLST will have a booth in the Cloud Computing section of the Expo hall.

Another of my medium-term swing positions that I've held from 2.86 and through the red the past few weeks is FSI International (FSII) and patience is paying off there too with the stock closing almost at the highs today at 3.22. The trend remains up and hopefully we can get to the 200SMA around 3.40 before the full Stochastics peak.

I lightened up my short-term and day-trade positions before the close today, shedding TSYS, OMEX, ATEC and GIGM for more or less break even. My booked profits from NLST and JASO more than offset the small losses in GIGM and DYP so I was green for the week. I'm stuck in PEIX for now but a rising wedge is still in play there so I'll just bide my time. I'm holding spec play ABTL for now from 0.90.

Finally, an update on the stocks I mentioned in my previous post. The bull flag I highlighted for  AAU  may have been negatively violated in the last couple of days and it's for that reason that I held off adding to my position today around the 2.73 lows. The MACD on AAU has a bearish look to it right now so I may have to be patient here before I get back to green. In hindsight, the distance between the Bollinger bands might have been a clue that it wasn't about to break that wedge after all.

 CIGX's chart, one I tweeted regarding a rising wedge pattern, may offer better prospects of a basing/consolidating pattern than AAU, with the MACD a little tighter. Much will depend on the broader market but I'm hoping to see it start coiling back above 2.00 in the next week or so, but we'll see.

HAUP took a breather today, ending down despite tacking on gains intraday, but that's hopefully a healthy sign rather than a retracement back to the moving average support below around 2.40.

Potential Portfolio Movers

The market continues to fly higher but it was a disappointing day for me personally, with none of my short-term swing positions putting enough distance between my buy-in price and their closing price for comfort, and a couple of day-trades also not really panning out.

SATC got as high as 4.30 but despite tapping that level three times, it couldn't break through and I sold in the after-hours session at 4.26 for a gain of just 0.06, basically enough to cover commissions. I ended up holding PEIX overnight as I was encouraged by the action towards the close.

In addition to HAUP coming to life and popping as much as 0.35 today (my order that went unfilled at 2.30 last week is coming back to haunt me!), a couple of swing positions are looking promising.

FSII looked as though it might cut loose based on early volume but ended up adding 0.10 and closing just above the 50-day SMA at 3.02 which will hopefully be significant as we approach the company's earnings results on October 19. Back in May FSII raised their Q3 guidance and that helped propel the stock to 5.00 but it dropped 50% over the summer and then recovered to where we are now.

The chart is bullish and assuming the results don't surprise (either for the better or the worse -- FSII's Q4 guidance was in accordance with analysts' estimates of net revenues of between $5m and $6m), it'll hopefully gradually rise higher, with some nice room to the 200-day at 3.40. The stock has been prone to sharp sell-offs recently, though, so caveat emptor there...

Almaden Materials (AAU) has been popping and flagging in the last few weeks since it leapt above 1.00 and with the last two days' fairly narrow trading range, the chart looks ripe for another potential break-out of the pennant formation that has formed since it rose to 3.29 a couple of weeks ago. I sold on that pop at 3.22 and have since re-bought at an average of 3.05. It doesn't like red market days, though, and sank to 2.80 late last week, a buying opportunity I passed up.

Hauppauge Digital's (HAUP) move off the bottom this week looks to have initiated a new up-trend, with a positive MACD cross on the cards in the next few trading days. Today's close was above the 20-day SMA and hopefully that will provide support, though the 50-day (2.55) has been a robust source of support and resistance during the move higher that started in July.

Portfolio Update - 10/12/10

Medium-term swing trades: AEZS, AVNR, HDY, NLST, FSII, HAUP
Short-term swing trades: AAU, CIGX, GIGM, JASO, TSYS

The strength in the market remains as the pullbacks, including this morning's steep drop of almost 10 points on the S&P, are bought up and that is keeping the Index above 1165 — indeed there was a run to 1172 at one point today following the release of the Fed minutes but there was little response from my portfolio which remained largely unchanged.

Hyperdynamics (HDY) was already charging ahead above the 3.00 mark it broke yesterday and got as high as 3.29 which represents close to a 200% gain since I bought in around 1.20 as a speculative play based on their exploration of a potentially oil rich area off the coast of Guinea in West Africa.

The results of the 3D seismic survey are due in the next few weeks and the surge in the stock is clear evidence of the anticipation of the results as, with 77% interest in the area, a positive find of the order expected by the company would be massive for Hyperdynamics.

For me, I can't help but treat this like an FDA run-up play and have to keep profits in mind as negative news could cause a precipitous drop in the share price. As of right now, perhaps as little as a month away from the publication of the results, the stock is very stretched, showing as over-bought on the RSI and Full Stochastics indicators, but momentum is clearly driving this so we may just see a pause in the action before resuming the up-trend.

Netlist (NLST) finally broke out after a few days drifting around 3.00. It was clearly under accumulation and exploded this morning to the resistance point at 3.60 while I was away from my trading desk so I missed an excellent sell point for may shares averaged at 3.03.

NLST is notorious for giving up its gains quickly so I'll be looking at tomorrow morning's early action with interest, possibly bailing in the pre-market if I get the price I want.

After selling day-trades DYP, ZLC and NEI, I'm a little down for the week so far but also have swing trades running on AAU, CIGX, GIGM, JASO, TSYS, all of which are either slightly red or not green enough and therefore a little uncomfortable given the fact that the market could correct at any moment. It is October after all...

Portfolio Update

The Cruel World of Biotech

This week offered a lesson in the pitfalls of the biotech sector and the FDA run-up, as ALXA's slide continued and I ended up with a paltry gain from a trade that was, at one point, a really solid win. Indeed, the only way I could have played this one any worse was if I'd sold at the week's very bottom (so far) of 2.695. As it was, I dumped at 2.70 and after touching 2.70 again today, the stock promptly reversed to just below 3.00.

Yesterday also saw JAZZ drop precipitously from the 10.80 area to an intraday low of 9.61. Not wanting to take any chances so close to the PDUFA date of 10/11, I quickly sold on the first bounce at 10.14. The stock recovered (of course!) and eventually closed in the 10.20s. So, nice profits from a 70% gain on JAZZ but healthy gains passed up on ALXA. Still in AVNR, though that one has stalled and I missed my entry on BIOD today. Keeping that one on watch.

Other stocks on my radar for the rest of the week:


Sold AAU at 3.22 the other day. Looking to get back in before it takes the next leg up.

Looking to add more HDY on the 2.50 break

Been watching and watching this one. May be time to jump in before it breaks that wedge.

Watchlist 10/4/10

Caution seems to be the dominant sentiment among traders whose blogs and Twitter streams I follow as we go into the first full trading week of October, a month that has historically been messy for the market. While there remain plenty of attractive setups, uncertainty over the prospects of breaking and holding the 1150 barrier on the S&P and the consequent possibility of an imminent pullback to support levels has many  sticking to a short-term outlook.

As a swing trader — and one that is a little in the red on a couple of those swing plays — I'm hoping that there is a bit more juice to this rally before it corrects slightly, but I have also been careful to exit day trades at the end of each trading day where possible, as was the case on Friday.

Most of my focus this week will be on ALXA and JAZZ as I weigh up the best time to exit both those FDA run-up trades. ALXA's run has been checked by technicals and that large share sale and I may need most of the week to see if I can get closer to my trading goal of around 4.00.

Other stocks I'll be watching tomorrow...

CWTR - there may be a little more to this current up-trend seeing as it's sitting on the 200dma but the stochastics remain oversold so a period of consolidation is not out of the question. Keeping it on my radar, though

RAS - much talk of REITs being on the upswing and there's plenty of room between here and the next moving average line around 1.90

SIMG  - I'm long over $5

HERO - Hercules Offshore's chart continues to look great if it can just stay above 2.70/2.71

AKRX - Lots of eyes on Akorn, a stock I sold at break even for cash when the market was in trouble over the summer. I'll look to add of there's momentum above the 4.07 mark

Riding the Run-Up

Over at BioRunUp.com, there's a timely article dismissing concern that the biotech run-up strategy is faltering on the eve of its "Superbowl". October plays host to an unusually high number of FDA decision deadlines, perhaps the most eagerly anticipated being the two sets of PDUFA dates that fall on the same day: JAZZ and ALXA on October 11; and AVNR and BIOD on October 30.

Though JAZZ's JZP-6 Fibromyalgia drug candidate was hammered at an FDA panel in August, the stock has recovered spectacularly and with some investors banking on what would seem to be the outside chance that the company can convince the FDA that its REMS program can successfully mitigate the risk of what is ostensibly the date-rape drug GHB falling into the wrong hands, there may yet be a final boost to the stock's run-up from a steep post-panel sell-off.

The stock hit a momentary low of 5.90 in the seconds after the trade halt was lifted on 8/20 and filled the gap in fairly short order, touching 11.00 in the pre-market earlier this week. Much of that is due to the company's strong fundamentals outside of their JZP-6 candidate, but there's probably a run-up element in there too. The FDA's primary concern at the panel was not so much the safety of the drug but the risk of misuse or accidental dosage.

Though it's surely too much to expect JAZZ to reach its 52-week high just below 14.00 in the next 10 days, I'm hoping we see 12.00 at some point.

With ALXA, AVNR and BIOD all ending down for the week just ended, some might be questioning the effectiveness of the run-up strategy, but as Mark at BioRunUp says, echoing my own thoughts on this, all three stocks have already run up quite a way already and are experiencing what might be considered healthy pullbacks in recent days. All three were over-extended coming into the week and pulled back, though news of an equities sale by ALXA on behalf of a large shareholder helped to dip that stock excessively under 3.00 in the after-hours session yesterday.

It came back modestly today and with some positive speculative noises emerging this week on the possibility that their AZ-004 drug could get the green light from the FDA, a pop in the stock next week is not beyond the realms of possibility.

For Avenir and Biodel, the end of the month is still a way away and there is plenty of time for both stocks to resume their upward momentum. Personally, with a full position in AVNR already established, I'll be looking to scale into a position in BIOD once I've exited my ALXA and JAZZ trades next week. Hopefully, it'll be under $5...

Again, as BioRunUp suggest, If you look at the last few weeks, it's clear that the run-up method is still alive and well and should not be viewed in terms of the home stretch. Both Alexa and Avenir rose around from the mid 2.00s to the mid-3.00s before this week and Biodel rose from below $4 to a peak of around $6. Plenty of money to be made there if you played your cards right!

Of course, in addition to reward, the biotech sector is full of nasty pitfalls, not least sudden dilution, as has been the case with SNSS twice since June. Today's $15m share offering priced at 0.35 came out of left field for me and plunged me further into the red on this stock with no immediate hope for recovery unless I want to aggressively trade my way out. I may have to consider taking the heavy hit and moving on...