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  • Nov 15th Weekend Forecast Edition- Did The Market Bottom Yet?


    Weekend Forecast Edition- Market In Trouble?



    We had been cautioning our SRP members over the past two weeks that the rally was unsustainable and a correction was overdue. The market managed to stay stubborn for a while, but finally we have just seen an 8 Fibonacci trading day decline to work off overbought sentiment. Last weekend we pointed out in our Forecast Edition that 2023 was a 38% Fibonacci pivot and would be an area to watch. We closed on Friday at exactly 2023.

    Then… the Paris attacks happened near the market close. Though this has nothing to do with market fundamentals per se, it can affect the psychology during an Elliott wave correction pattern. We had identified 2116 as a Wave 1 high of Primary wave 5 recently. We said wave 2 would likely be shallow to about 2023. However, we will have to see how the market participants respond following this event, it may be that it actually marks a bottom in sentiment, or it kicks the Wave 2 correction to a more standard 61% retracement near 1965 on the SP 500.

    We also have several charts this weekend that will help you see what is going on across a few different indicators that we use at SRP Research. These market movements help us determine in advance whether to be stepping on or off the gas on our swing trades for example. Over the past two weeks sensing a wave 1 high, we began to aggressively take profits as stocks were rallying aggressively. We could sense a momentum sentiment high and euphoria.

    One of the pieces of advice we often give our SRP members is "When you are high fiving yourself for how smart you are as a trader, make sure you are taking profits".

    We followed our own advice and we had profit taking on ZIOP for 35% gains on Wednesdayfor example before it corrected from 14.93 to 12.57 2 days later. We sold out of CLLS a week ago at 47% gains before it corrected hard. We closed out LABU ETF over a week ago for 19% gains, and we whittled down open positions to just 1/2 as of Friday.

    The market paints pictures, and you should heed them. When you are feeling like nobody can stop you and all your stocks are going up, that probably means you're getting close to a momentum high. When you feel near the opposite, your close to a buying low. We identified that low on September 30th with a 10 Bullet point forecast to our SRP members and a few days later to SR members via the weekend edition. That marked the bottom and we predicted a rally to 2080 when the SP 500 was at 1890.

    So what next? Well we have several mixed indicators right now so here is our view near term.

    1. 2023 on the SP 500 needs to hold, otherwise this wave 2 decline could drop as low as 1965 or a bit lower. After an 8 day decline normally you get a rally or bounce.

    2. The Biotech Index is key to watch, the IBB ETF is holding the new uptrend line and had a 61% retracement of the recent rally off the bottom successfully last week. See our chart…

    3. The % of NYSE stocks below their 200 day moving average increased from 60% to 73% this past week, back in decline (See our Chart). This is back in a downtrend, there is a lot of individual stock carnage underneath the indexes. This type of metric is more bear market than bull. It means the leadership has narrowed and fewer and fewer stocks are trying to hold up the market.

    4. The SP 500 has a few gaps as does the NYSE chart below that may fill

    5. The NASI momentum indicator peaked around November 5th and is still in a downtrend.

    6. The market just had an 8 Fibonacci Trading day decline as part of Wave 2 (These are the worst corrections in a 5 wave pattern). If we don't turn around on Monday and head higher with authority, we will likely have a deeper retracement to 1965 on the Index in our opinion. If we turn around hard, then the Paris attack marked the bottom at a 38% Fibonacci pivot at 2023.

    Below are several charts that should help you see what we see…

    BIOTECH, NYSE Index, % Of NYSE Stocks above 200 day MA, NASI momentum, SP 500

    (click to enlarge)(click to enlarge)(click to enlarge)(click to enlarge)(click to enlarge)

    Bottom Line? This is a Clear Elliott Wave 2 correction. These are the strongest and sentiment turns south fast. We are not clear that the 38% retracement is a bottom just yet, we should have clues though very early in the week via the IBB ETF and the 2023 area on SP 500 as support.

    SRP has pulled back to very high cash positions by closing out multiple swing trades for fat profits in the past two weeks, and now we will be a bit more cautious near term as well for the interim until we get clarity. Sometimes the best move is no move, and Cash is a position…

    We will close this weekend edition with one of our mantras we issue to SRP members when we issue Sell Alerts to take profits "The market giveth and the market taketh, make sure you taketh while it giveth".

    Learn more about our Market smashing Forecast, Swing Trade Alert, Research, Morning Pre Market report, Text and Email alert service at

    SRP Logo 1280x360 size

    Nov 15 10:25 AM | Link | Comment!
  • The Next Market Move And 6 Swing Trade Requirements For Success
    Why the market is stuck in a 7 month sideways pattern:

    This past week we continued with the market volatility both on the upside and the downside. We have maintained a 7 month base pattern in the SP 500 that stalled out so far at the 150% Fibonacci pivot at 2130 area recently. Markets as a whole tend to move based on human behavioral patterns and whether the collective chooses to interpret the gauntlet of news as bullish or bearish.

    In a Bear cycle, news is interpreted with a negative bias whether its great, good, bad, or ugly. In a bull cycle, bad news is good, good news is great, and great news is even greater. We are in a Bull cycle, so the overwhelming sentiment will always be to interpret economics and or other news as bullish. This continues until such time that the Bull cycle reverts to a Bear cycle. Those usually last anywhere from 9-18 months historically. So when we mention a 150% Fibonacci pivot in the SP 500, we refer to the current Bullish up cycle (Or Elliott Wave) as it relates to a prior upcycle in terms of amplitude. Certain areas like 150% and 161% are common bull sentiment stall out areas, where there is flux of bullish and bearish interpretations to news. This is why the market is in a 7 month base pattern, there is a major tug of war. Our longstanding 2181 SP 500 target that we gave out last November remains on track because we knew it was a likely MINIMUM upside wave target based on prior wave structures during this Bull market.

    We think eventually this 7 month base pattern could resolve to the upside once again, with a common Fibonacci cluster occurring at 2525 sometime in 2016. The market therefore remains great for swing traders during this sideways pattern and its where SRP has been dominating with our returns. Just in the past 10 days or so we closed out interim position swings for 20%, 23%, 18%, 13%, 9.4% in our 5 most recently closed out positions. We are doing this while the SP 500 remains in a sideways pattern. The way we do it is complex but essentially we focus most of our time and money on the strong sectors while shunning the weak or "value" sectors. We have stuck with Biotech, Medical, Technology for quiet some time, even during the corrections this year. In addition, we have branched recently into Financials and Molecular Diagnostics as two more examples. The SRP investment committee is always on the lookout for the up and coming sectors that are gaining strength and for the individual stocks within those sectors that have consolidated and look poised to break north with a combination of strong fundamentals and near term catalysts both.

    Being contrarians to some extent, we want to note that the NYSE short interest has been climbing for several weeks getting to near multi month highs. We also have the percentage of Bullish Advisors at multi-month lows now only 45.5%, where we were at 58% at the highs not long ago in 2015. Along with other indicators we review, it keeps us more on the Bull side of the fence rather than the Bearish side at this time.

    With that said, the SRP portfolio which consists of 80% swing trades and 20% long term positions has managed a very conservative 208% return vs 29% for the SP 500 index since our 9/1/13 inception. We do not compound any of our gains, and we assume each position dollar amount is the same as when we started almost two years ago, even though our portfolio returns would have taken us from $60,000 to north of $180,000 during that time frame. This is inclusive of all losers and winners as well.

    Our swing trade record over last 16 weeks (Click to Review)

    With swing trades, we focus on several elements for success:

    1. Proper entry ranges observed, which means a maximum entry point for all positions (No chasing)

    2. Proper monitoring of upside projections within market dynamics and forcing ourselves to take partial profits on certain percentage moves. Many traders forget to take profits when they are feeling giddy and proud of themselves, and yet this is the best time to do so. Sell when everyone is on the message boards congratulating themselves, and buy when everyone is bored with a good story, a post IPO Base pattern, 8, 13 fibonacci day and week patterns etc.

    3. Not falling in love with a story, and certainly not if its a swing position. Follow your initial intent.

    4. Using a "stop near close" methodology as opposed to intra-day hard stops which most traders use and will generally reduce your performance dramatically due to "noise" and computer trading algo's.

    5. Setting the "stop near close" points at strategic areas that are not too tight nor too loose for the stock condition. Setting them too tight will cause a lot more losses, and too loose big losses. We use proprietary signals and technical indicators to pinpoint where that stop near close level is. In probably 80% of cases we have seen our swing trades come down to or below the stop near close points, only to later in the day reverse higher and keep us in the position. We find this methodology has led us to massive outperformance against nearly all other swing trading methods.

    6. We first focus on fundamentals, and then we look at chart patterns… not the other way around like many do.

    So those are just a few of our thoughts this weekend. We now turn to a small list of potential swing trade candidates that are making the initial grade for our preferred list. We share these with traders and members every weekend and often pull from them for actual SRP swing alert positions.

    13 Stocks of interest or potential further gains or breakouts worthy of more study:CBM; PAYC; GTN; OUTR; SYNA; NSR; BSFT; HZNP;BZUN; SNCR;HAWK;INCR;ESNT

    If you are not yet an SRP member, read all about our work and our track record at our website:

    Jun 21 1:12 PM | Link | Comment!
  • ICEL- An Under The Radar Cell Sciences-Regenerative Medicine Value Play

    Notes: This research report was going to go out to our SRP members on 3/23, but the Biotech sector took a hit and we held off. Well, they got bought out by Fuji Film for $16.50 as announced 3/30/15 in pre-market. Either way, we wanted to sample our research work and not lose all the time we put into this report... is our paying subscribers premium service and is our free opt in service.

    ICEL- Cellular Dynamics International $8.03 as of 3/23/15 Close

    All time post IPO high $24 2013; Post IPO Low: $4.72 2015

    Shares Outstanding 16 Million; Current Cash: 34 million; Market Cap: 125 million

    IPO Date: 7/25/13- $12.00 3.8 Million shares sold, about 25% of the total shares outstanding.

    Underwriters were JP Morgan and Cowen and Company. Also, we note the esteemed Piper Jaffray firm was recently participating on the last conference call, which is a good omen. Also, a Goldman Sachs executive joined the board in the 4th quarter of 2014 which we find of interest.

    • With over 100 employees and more than 800 patents, CDI manufactures human iPS cell-derived cell types with the quality, quantity, and purity required for basic life science and drug discovery research.
    • Their founder, James A. Thomson, VMD, Ph.D., is considered the pioneer and inventor of modern day Stem Cell research and technology.
    • The company is emerging as a leader in Regenerative Medicine with recent 57% year over year revenue growth.
    • The Pritzker family (Hyatt Hotels) controls 20% of the shares; Wasaatch Advisors own 10%; Founder owns 6%.
    • Insiders took up 25% of the original shares in the IPO offering
    • No insiders have sold a single share since the IPO
    • Insiders basis in the stock prior to the IPO was $10.46 per share, lower than the current price

    Company Summary: CDI (NASDAQ:ICEL)

    We develop and manufacture fully functioning human cells in industrial quantities to precise specifications. Our proprietary iCell Operating System (iCell O/S) includes true human cells in multiple cell types (iCell products), human induced pluripotent stem cells (iPSCs) and custom iPSCs and iCell products (MyCell products).

    Our iCell O/S products provide standardized, easy-to-use, cost-effective access to the human cell, the smallest fully functioning operating unit of human biology. Customers use our iCell O/S products, among other purposes, for drug discovery and screening; to test the safety and efficacy of their small molecule and biologic drug candidates; for stem cell banking; and in researching cellular therapeutics.

    Its important we think to understand the background of this company and specifically Dr. Thomson:

    Dr. Thomson's derivation of human ES cells was featured as Science Magazine's "Scientific Breakthrough of the year" in 1999, and work from Dr. Thomson's laboratory has been cited in TIME Magazine's "Top 10 Discoveries of the Year" on three separate occasions, including the isolation of human ES cells (1998, #1), the isolation of human iPS cells (2007, #1) and the collaborative mapping of the human epigenome (2009, #2). He was featured on the cover of TIME Magazine's "America's Best in Science and Medicine" in 2001, and in 2007 was named one of TIME Magazine's "100 Most Influential People in the World." Dr. Thomson has published over 150 scientific, peer-reviewed papers and has been an inventor on 30 issued patents.

    Since the IPO, this BioScience company has managed to fly under investors radars in a big way. After initially doubling from the IPO on a lot of initial excitement, the stock has drifted down for about 15 months until very recently when then trend we believe has reversed for the long term. With a market cap of only about 125 million we could call this a micro cap company and the smallest market cap in our long term SRP stock universe. That also means the upside may be the best as well.

    Company description of business:

    Our iCell product line currently includes four different cell types: cardiomyocytes, neurons, hepatocytes and endothelial cells. We are actively developing an additional seven different cell types, and we expect to use our platform to continue to expand the iCell product line. iCell products are a consumable designed to be used once and then reordered. We manufacture our iCell products from our iPSCs. An iPSC is a cell that has the ability both to replicate indefinitely and to be transformed into any cell type in the human body. We develop and manufacture our iPSCs from ordinary blood or skin using proprietary techniques that expand upon those pioneered by our founder Dr. James A. Thomson. Once we produce an iPSC, it becomes a renewable source of starting material for our iCell products and stem cell banks.

    The fact is the controversial method of using human embryos to create stem cells was holding stem cell research adoption back. Isolating the cells typically destroys the embryo, and the research sparked fierce debates over bioethics. In many countries, including the United States, political decisions limited the work scientists could do with hES cells. However, Dr. Thomson was among a few scientists to make all of that change in 2007.

    In 2006, Japanese researchers reported that they had found a possible way around the practical and ethical questions surrounding hES cells. By introducing just four genes into mouse tail cells growing in a lab dish, they could produce cells that looked and acted very much like ES cells. They called these cells induced pluripotent stem (iPS) cells. This development was recognized as the first runner-up in Science's 2007 Breakthrough of the Year issue, that same team and Dr. Thomson, the founder of ICEL, extended the reprogramming technique to human cells. That result opened the floodgates to new research.

    First published in Science in late 2007 in an article titled "Induced Pluripotent Stem Cell Lines Derived from Human Somatic Cells", the results garnered international attention for potentially ending the ethical controversy surrounding human embryonic stem cell research. Science later featured induced pluripotent stem cells in its "Scientific Breakthrough of the Year" article, 2008. The invention in 2007 though of stem cells derived from human tissue has since then quickly paved the way for massive innovation by ICEL and a tremendous growth in their customer base. Using iPSCs sidesteps any ethical concerns that have been raised over the years in using human embryonic cells as well as decreases the risk of an immune system response to attack implanted cells.

    Cumulatively, through its licenses from Japanese Scientist Dr. Shinya Yamanaka (he won the Nobel Prize in Medicine or Physiology in 2012 for his work on iPSCs) and intellectual property, CDI uses iPSCs to make human heart cells, brain cells, blood vessel cells and liver cells, as well as offering its iPSC skillset tailored to a client's needs. Yamanaka has ties to CDI (ICEL) as it's often called, as a member of the scientific advisory board of iPS Academia Japan, Inc. IPS was originally established to manage the patents and technology of Yamanaka's work, and is the distributor of several of Cellular Dynamics' products, including iCell Neurons, iCell Cardiomyocytes and iCell Endothelial Cells. In 2010, Cellular Dynamics was the first foreign company to be granted rights to use Yamanaka's iPSC patent portfolio.

    These human cells produced by CDI are used for in vitro and in vivo applications for drug discovery, toxicity testing, chemical safety, stem cell banking and other therapeutic research. In a highly technical and niche market, CDI has emerged as a global leader with the ability to generate iPSCs with specific disease-related genes that are invaluable to researchers across a broad array of indications.

    ICEL is some 7 plus years from these early stunning stem cell innovations and yet still trading $4 below the IPO price of $12 in 2013. Concerns and misconception over human embryo based stem cells weighed the stock down, most of that is due to lack of understanding and education though. Pluripotent Stem Cells are derived from human tissue, and not from Embryos, and hence the breakthrough and IPO.

    This is all about to change if we are right due to recent business developments and wider spread adoption of ICEL's manufacturing of cells for various indications, testing, trials and more and the kicker being the introduction and growing adoption recently of what we call Hepatocytes, which are emerging as cell usage for Liver related studies and diseases in various trials as well as testing (Malaria). If these emerge as the standard for testing, then ICEL stock will blast off at some point we think.

    Business Developments:

    Hepatocytes for liver study: Possible emerging standard for testing and also liver disease studies

    So what is starting to permeate the literature and starting to happen in pharma is they are seeing that our cells can be used to predict the therapeutic benefit of compounds. Data in the past has shown that you can show the toxicity profile, that's where the cardiomyocytes and FDA comes in but the upside is when the cells are useful in finding new therapies, they can be used in high throughput screening for that. And I'd just encourage everybody to watch what happens with our hepatocytes over the next year or two, because I think that's where we're going to see it first.- CEO on recent conference call

    Much better than cells from Cadavors and other current options, Hepatocytes can mimic actual human liver cells in vivo. iCell Hepatocytes are virally infectible. They support the entire lifecycle of hepatitis B and C. This makes them a unique model system for use in high throughput screening of drug libraries, particularly for their effectiveness in treating hepatitis B and C and other infections of the liver. Liver is the most difficult organ in the body for scientists to come up with solutions for disease, not to mention the punishment the liver takes during chemotherapy. This is therefore one of the most studied organs in the human body and therefore the likely demand for the use of ICEL's Hepatocytes could balloon. The opportunities for iCell Hepatocytes product continues to grow. Q4 hepatocyte revenue grew to $904,000 from $390,000 in Q4 2013, an increase of 132%.

    Malaria and other tests: Hepatocyte application out of MIT

    In February of this year in fact, ICEL announced they were able to develop Malaria in a dish using Hepatocytes to help test for Malaria in a study done out of M.I.T. This shows the expandibility of the ICEL platform. This is yet another example of utility of this product.

    Super Donor Lines

    Recently, ICEL also announced the manufacturing of initial "Super Donor " stem cell lines. "Cell therapy offers the promise for the repair and replacement of this damage and for the regeneration of healthy tissue. CDI is delighted to have produced two HLA superdonor iPSC lines that match 19% of the U.S. population, and over time we plan to build a bank that will match 95% of the U.S. population. We expect this bank to prove to be an excellent resource for CDI and others to develop HLA matched cell therapies."- Bob Palay, CEO February 2015

    Importantly, ICEL was also awarded a U.S. Patent in August 2014 covering automated production of all human pluripotent stem cells which covers research, cell therapy, and cell banking. Automation is essential to building large banks of stem cells and to the eventual banking of iPSCs for therapeutic use.

    Blood Cord Developments:

    First, in January 2015, we announced a research collaboration with Cord Blood Registry, CBR. CBR has stored over half a million cord blood samples for potential therapeutic use. Under the collaboration, CDI will demonstrate our capability to reprogram umbilical cord tissue into induced pluripotent stem cells. If successful, we believe this will open the door to working with cord blood banks and make CDI's iPSC products more widely available. CEO- Bob Palay 4th quarter conference call

    Clinical work:

    CDI has also seen steady progress in their work with academic collaborators in moving themselves toward the clinic. Efforts continue with academics on pre-IND animal studies of their DopaNeurons and cardiomyocytes for use in the treatment of Parkinson's disease and myocardial infarction heart attack.

    Macular Degeneration: October 2014: Massive market opportunity

    AMD is a common eye condition and a leading cause of vision loss among people age 50 and older. It causes damage to the macula, a small spot near the center of the retina and the part of the eye needed for sharp, central vision, which lets us see objects that are straight ahead. In some people, AMD advances so slowly that vision loss does not occur for a long time. In others, the disease progresses faster and may lead to a loss of vision in one or both eyes. As AMD progresses, a blurred area near the center of vision is a common symptom. Over time, the blurred area may grow larger or you may develop blank spots in your central vision. Objects also may not appear to be as bright as they used to be.-

    The company announced that the National Eye Institute (NASDAQ:NEI), a division of the National Institutes of Health (NIH), awarded the company a $1.2 million contract to manufacture clinically compatible induced pluripotent stem cells (iPSCs) and iPSC-derived human retinal pigment epithelial (RPE) cells. These cells will be manufactured from individuals suffering from dry age-related macular degeneration (NASDAQ:AMD) and will be used for investigational new drug (NYSE:IND) enabling studies. Once the IND is approved, the same procedures will be used to generate clinical-grade iPSC-derived RPE tissue for transplantation into AMD patients. This process, known as autologous cellular therapy, would be the first of its kind in the U.S. This alone is exciting as Regeneron has a 50 Billion market cap and has grown dramatically since getting FDA approval for an AMD indication.

    Revenues and Customer Growth:

    Regenerative Medicine is not just the future, but the present. Having industrialized iPSCs, CDI is unlocking an exciting potential product matrix, every cell type in the human body by every person on the planet. Over a 10 Billion dollar opportunity for ICEL alone according to company data. The first is the $3.5 billion market for the in-vitro use of cells in drug discovery, toxicity testing and chemical safety. The second market is the $1.3 billion market for stem cell banking. The third market is the $5 billion for in-vivo cell based therapeutics.

    CDI Customers have grown year over year from 150 to 200 in 2014 per a recent conference call. Revenues grew 40% year over year in 2014 vs. 2013 and accelerated in the 4th quarter to 57% growth. Q4 2014 revenue was $6.6 million versus $4.2 million the previous year. In addition, the CEO Bob Palay in the most recent earnings conference call hinted at new initiatives out of Japan. There is the potential for AMD (macular degeneration) applications, Cell Banking, Super Donors, Liver studies, Malaria and other tests, Parkinsons, Heart Failure, and the list continues. At 125 million market cap, SRP research thinks patient investors should be rewarded.

    Even returning to the IPO level of $12 would produce a 50% gain from here alone. Other companies in the regeneration Bioscience sector include INO, SGMO, BLUE, FCSC, BCLI etc. all of which are carrying much larger market caps than ICEL. In addition, all of them are presenting at an industry Conference on March 25th in NYC this week.

    The charts indicate the downtrend is over and a new uptrend is likely underway. We would expect the stock to trade up to the $12-$13 area this year from $8 levels for a 50-62% upside. The company has not issued a single share since the 2013 IPO which is quite amazing at this time, they have been very good stewards of shareholders cash.


    Mar 30 8:05 AM | Link | Comment!
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