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cbryant1990's  Instablog

Well trained in numerical methods in scientific applications. My interest are in the application of scientific analysis of random fluctuations and trends in natural systems.
  • Spectrum Pharmaceuticals - poised for a jump to $7.23?

    It was dissapointing today to say the least.  We had two Fibonacci
    levels to move towards.  The approval would have sent the stock to
    $7.23.  We didn't get the approval.  The stock went to $6.23 which is
    the 100% retracement level.  In other words the stock has reached the
    low before the Zevalin approval.  That means all of the value of the
    Zevalin approval has been discounted.  If you are in for the long term
    you should buying.  The stock sits at a precipice.  The next Fib level
    down is $4.95.  Those of you that are long remember the last time we
    were there. It's not entirely out of the question, however, if the
    stock moves there, it would be a great buying opportunity. I don't
    think it will happen since there is $4 cash on hand.  A delay might
    cause a drop below $6.23, but it would be followed by a gradual move
    up to the present $6.23 level. The reason I say this is that  the level of the money flow index (the bottom graph below) is screaming at us to buy.  It's buying time when that number hits the red line. Sell when the stock price goes over the green line. It's not rocket science.

    There are several 4Q announcements to look forward to.  Theres a
    November sit down with the FDA to go over the design of the fast track
    for Eoquin.  Theres the expected concurrence from the EMEA for the BCG
    failure study.  Theres the closing of the enrollment for the 2 phase 3
    studies for Eoquin.  Theres the closing of enrolment for Ozarelix.  There is the announcment of an Asian partner. There is the 3rd quarter results that will very likely show growth in  both Zevalin and Fusilev.  This can be predicted this by linearly extrapolating the last 4 quarters revenues for both drugs.  

    Position: none..probably long tomorrow on the initial dip

    Oct 09 01:36 am | Link | Comment!
  • Spectrum Pharmaceuticals - The Little Engine that Could
    Spectrum Pharmaceuticals is like the “Little Train that Could” story. The company and its shareholders are full of optimism and hard work. Anyone familiar with the newly reorganized company must pay their respects to Rajesh Shrotriya , M.D., the company’s CEO and President. Dr Shrotriya took the failing NeoTherapeutics and turned it around into an emerging biotech that unarguably has the most sound financial footing in the small cap industry with a whopping $150M cash on hand. The interesting question is what with they do with the money? There have been rumors of buyouts, but I have to believe that Spectrum is looking for new drug candidates. Rather than look for a new candidate, why not obtain a whole new pipeline. I’m talking about SOLIGENIX formally DOR Biopharma. SOLIGENIX is actively looking for partners or a merger. They have a pipeline that’s every bit as exciting as Spectrums, and they need money. I especially like their government contacts and contracts as well as their biodefense pipeline. Now there’s a honey-pot Pooh! 
    Michael Vlaicu at Biomedreprts.com  has written a complete description of the potential of SOLIGENIX at Biomedreports.com here. I won’t repeat his excellent research, but I will join him with the same enthusiasm for the company and its prospects. The combined Spectrum-SOLIGENIX pipeline would read like a major pharmaceutical, and that would get investors excited about the combined company.
    Real quickly, I want to mention today’s technical chart for Spectrum. The company has seen a full 100% retracement from the August 17 low leading up to the Zevalin approval. In other words the market has completed discounted Zevalin. That’s a good thing for those just getting in. Speaking of getting in. Look at the money flow index. It's as low as it is possible to get without a flood of buyers getting in on good news.  Remember to sell when it hits 80 if you are swing trading.
     
    The discounting of Zevalin means there’s a lot of upside potential regardless of the Fusilev approval. It will take a quarterly report showing Zevalin sales growing to make the market stand up and take notice. Once that happens, all bets are off. This is what Spectrum has been working for. If they follow through, the company will earn a great deal of respect.  

    The Fusilev approval is not an item of interest to me with regards to earnings. If you use Justin Hall’s figures for expected sales of 200,000 units along with my own research indicating $50 for each 50 mg vial, we can expect revenues to increase by $10M next year. Don’t get me wrong, I like a solid $10M added to the top line, but as far as the expected pop in share price, I don’t expect it to add more than $1. That puts my estimate for the post approval share price at $7.50. Oh wait, that number rings a bell? That’s exactly what the institutional buyers thought it was worth. It’s funny how smart those guys are sometimes. It’s a fair price for a good company with lots of potential.
    Long: SPPI, SNGX, CVM
    Tags: Spectrum Pharmaceuticals, Fusilev, Zevalin
    Oct 06 12:41 am | Link | 2 Comments
  • Anatomy of a Rally
    As September came to a close, we had a very interesting day. The market jumped initially before it went down hard. The bulk of the day saw a gradual rise to even, then another sharp push down was followed by a gradual rise to just under even. What does it all mean? I think it was the bears wringing out everything they could get before the next leg up on this 2009 rally. Let me explain.
    The question of whether or not we are in a bull market rally was settled on July 17th when the market had a 10% retracement and started a second leg upwards. Even the most hardened bears, had to get in at the summer’s end. I felt a little sorry for them. They couldn’t buy Apple or Google or IBM or US steel. No, they had to buy Fannie Mae, AIG, Citi Bank etc., etc. These were the leftovers, the crumbs on the floor.   They were responsible for Bank of America’s move from $12 to $18. The long positions were happy to see these folks sitting on the sidelines get in. It was the icing on the cake. 
    So what about now? What might happen between now and the year’s end? The bear and bull pundits are all saying the same sort of things. The bulls are hopelessly optimistic. The bears are just waiting for any negative news to start shorting the rally. The bears don’t need it. They have probably made all the profits they needed for the year. In addition, they had a great 2008. But the bulls on the other hand, had a bad 2008 followed by rather tough losses in the first quarter in 2009. It’s been a good summer for the bulls, but they need this rally to continue until year’s end.  I’m just guessing, but I think the stage is set for a strong 3rd leg up. I base this statement simply on the fact that the bulls need it. It’s one thing for a broker or fund manager to have a bad 2008. It’s quite another to have two bad years in a row. That’s when heads roll.  
    The bulls must push on. With the new earnings season starting October 7th with Alcoa, I expect the bulls to take advantage of the hope that companies have become much more efficient. It appears, and I cannot be sure, but it appears that companies will be reporting both bottom and top line increases. Who can say if it will last more than a quarter, but it appears that the third quarter is posed report better than the second. This will be the fuel that feeds the hungry bulls.  The market is fickle. It has a heart and soul, and it has a technical side.
     
    For those 5 followers that like to read my blogs, you know that I discuss the technical reasons to buy or sell a stock. I have discussed the so-called Fibonacci (Fib) levels within a discussion of Spectrum Pharmaceuticals so that the average trader can use free tools to casually perform their own technical analysis. My objective is to bring the tools that I like to use to the average investor.  it’s like a Penn and Teller sort of thing. I’m just revealing the magic. 

    \In my previous blogs, I have described how the Fibonacci levels end up being the places where the price action settles for a stock. Now I want to use the same science to PREDICT the movement of the S&P as a whole. It’s ambitious I know.
    Here’s my premise. If I can lay down the Fibonacci retracement lines on a historical stock rise and fall and see that the stock has  followed the Fib levels from a previous low to the high, I should be able to guess when a stock is moving to a new high, and knowing the previous low, the Fib levels will fall into place. Are you with me here? If not, let’s look at the S&P 500.



     
    This figure is a little complicated so I will do my best to explain the patterns that I see. First there are the purple circles. These are points of Fibonacci resistance during the S&P downturn starting in 2008 and ending in March 2009. Next, let’s look at the blue ellipses. The first one is rough. It averages about on the S&P 880 price. It occurs during the panic which runs from October 10 to February 10. It acts as resistance in February and support in May and July.  That’s a key number. I do not expect the S&P to ever break down below 880. If it does, something terribly bad has happened again.
    With regards to the rally, there has been only one retracement.  On June 1st we were at 940. By July 8th , we were at 878. It was a 10% retracement that followed the Fibonacci levels precisely. Now I need to make a clear distinction between a retracement and a consolidation. A retracement is when the entire market decides that it’s overvalued. A consolidation is when a smaller sub-group of the market decides to take profits. On June 12th, the entire market realized that it was getting overvalued. We had a tremendous rally off the March lows. Profits were taken. The bears, who were tanning in the summer sun, came back, seeing the full retracement from Fib 50% to Fib 61.8%, they jumped into the rally. They are responsible for the second leg of the rally which ran from July 8th to August 5th (the end of the blue ellipse #2 to the beginning of the red ellipse).  The red ellipse represents a time frame that shows bear trader’s taking quick profits. It’s a subset of the market because there was no retracement to lower Fibonacci levels. Longs are still long. Bears are still long. Traders are going long and short at this time. 
    The month of September shows that we moved from the 38.2% Fib level to the 23.6% level. And this is my point. I have drawn a predictive chart which starts at the March lows and tops off at S&P 1200 at Christmas. By doing this I am placing myself in the future as if it has occurred.  If this is not the path of the market, the Fib levels would not match what we have seen since March. If it is possible, they must match. They do match. This suggests to me that the S&P is going to 1200 by years end.  The only technical alternative is S&P 1000, but for subjective reasons listed above, I don't believe it's in the cards.
     
    Tags: SPPI, DRL, CVM
    Sep 30 11:57 pm | Link | Comment!
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