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Robert Edwards
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Contrarian daytrading technician who specializes in locating high probability short term trades while predicting price movement directions with over 85% accuracy. Most of my trading involves either extremely short term micro scalping of stocks or commodities (using 1 minute bar charts), or swing... More
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  • Please Tell "Chicken Little" The Sky Is Not Falling!

    In the original early 19th Century story of Chicken Little, the sky was not falling as it was only an acorn that hit the little chick in the head. In an animated version of the story, that I remember from my childhood, I remember it was merely a drop of rain. Listening and watching the current media hype surrounding the recent momentum stock, biotech and technology stock market correction, one could easily be convinced that this time is different and indeed, the sky is now truly falling. But the sky is not falling, Chicken Little! Please tell Marc Faber, we will surely not have a crash in the next 12 months, as crashes occur infrequently and are impossible to predict. The fact Mr. Faber is calling for a crash, greatly diminishes the probability of it occurring, especially in the timeframe he is predicting. Two types of traders are classic losers, those who are greedy, and those who are fearful. I refuse to be either. I will not let anyone frighten me into dumping my stocks just because they have suffered a correction. I will embrace buying when stocks are on sale! Buying low and selling high is what is required to beat the market. And I am seeing more bargains by the day!

    Just look at the stock market this past week. We got a bounce off the lows which faded in a couple days. But I was able to buy on the early week lows to average down in BITA, and then sell out on the rally at breakeven. And even though we fell back by the end of the week, I now have a very small position that I can add to early next week.

    Another stock, HALO, has fallen from a recent high of $18.18. to now trade down to a Friday low of $7.13. But the stock then rebounded to $8.01, allowing me to dump all of my recently purchased shares from $8.02 and lower. Then the late day selloff and 7 cent lower close at $7.42, was not a disaster, but a Godsend. I bought some shares on the close at $7.42 to average down a few shares I hung at $8.26, that I was unable to liquidate on Friday. Now, on a small rally on Monday to $7.84, I can dump out of those shares at breakeven leaving just my original core position priced in the $11.50 to $12.50 range.

    Should we dip lower next week, before retesting $8, I will just add to the position at $7.00, $6.75 & $6.50, and make even more money when the stock rallies back towards $8 hopefully later in the week. Now that HALO is approaching major support, it should provide fabulous scalping opportunities from the long side and I should be able to reposition my entire losing position to break even within 2-3 weeks or less.

    I recently wrote an article about Tesla Motors (TSLA) where I explained how the stock likes to correct for 7 weeks. Next week is the 7th week, and I anticipate a major low is just around the corner. And instead of being disappointed with the recent corrective price action, I am quite impressed how the stock bounced recently from $203 to $235. And I am especially impressed how stubbornly the stock has held above $200. In a recent article I was suggesting that one buy TSLA in the $165 to $190 range but it is now looking like the upper end of that range is all we will get to buy, on this correction, if we even get that.

    I also look at beaten down Twitter (TWTR). After being down 8 of 9 weeks, I was sure we would be up last week, but no, I was wrong. That makes a lower weekly close, 9 out of the last 10 weeks. The stock closed Friday near major support at $40.05. Friday's low of $39.68 is just 88 cents above the all-time trading low of $38.80. I agree with Jon Najarian who mentioned Friday on CNBC that he likes the stock near all-time lows, click here. And regarding the recent major shorting of TWTR shares, Jon mentions how the large short interest could help facilitate a rally due to a short squeeze, on the video. In another segment, click here, shorts are warned to watch out for the April 29th earnings release that comes a week before the big share lockup termination in the first week of May. The company should make a positive announcement around earnings to cause a pop and soften the blow of so many shares coming onto the market. But even without any positive announcement by the company, I can't imagine insiders dumping at $40 or under. Maybe they dump at $50, or $60, but not at $40. You buy the rumor and sell the fact but in this case, you sell the rumor and buy the fact. In this case, they have sold off the stock in anticipation of the large unlocking of shares coming in May, so when the event arrives, we should immediately bottom and rally. It should mark a major low and be a time to buy and not to sell. If troubled Facebook bounced off its lows when its shares were released from lock-up, all the more TWTR should rally as TWTR did not mess up their IPO like Facebook did. TWTR was loved when it was an IPO, unlike Facebook that was despised. For anyone who likes TWTR for a trade, check out this TWTR bull spread trade suggested on Options Action, click here.

    Late on Friday, I also bought shares in another recently IPOed stock, KING. I will continue to buy KING as it makes new lows under $18, as I expect it will finally trade at the IPO price of $22.50 some time in the next 30 days, and should hit $30 within the first 6 months of trading. With an IPO with a P/E ratio around 10, buying this stock is a no-brainer.

    Another stock I bought on Friday was Angie's List (ANGI). Buying this stock under $12 is another gift of the market that I will not squander. When I bought in the low $12s last week, as suggested in my article posted last weekend, I was able to sell out on a small rally to $12.86. I now bought at $12.02 and at the $11.78 Friday close, and expect a similar small rally at minimum, next week. I will be accumulating shares for as low as it wants to trade down to, in anticipation of a quick snap back to $16. I am not depressed, but in fact quite excited by the prospect of getting this stock at a giveaway price. Even if the bears are right and the company's business model is broken, it should not prevent me from making a lot of money buying the dips, even if the eventual price move is lower.

    Conclusion

    "Chicken Little, the sky is not falling! It is just a correction. It is big funds vacating the high momentum stocks. The big funds drove the stocks up to valuations that could not be sustained. Stocks got overdone to the upside when the funds got in, and now they are getting overdone to the downside as the funds get out and often short. And when the selling stops, which should be very soon, the stocks should quickly bounce back at least 50% of the recent selloff, even if a bigger correction is in the cards. This is the first dip off a major bull run which should be bought into. Only after rebounding close to the old highs and failing, only then should we begin a more serious correction, if one is truly coming. Right now is the time to buy and not sell. It is time to be greedy when others are fearful, as Warren Buffet suggests.

    If you are still not convinced, just consider that Herb Greenberg is saying it is not time to be buying the momentum stocks, click here. This is the same Herb Greenberg who called Green Mountain (GMCR) the "Short of the Century" when it was trading at its $15 bottom, just before it began a rally to over $100. Herb Greenberg is a smart man and he is quite accurate about saying where a stock is presently, or where it has been. He can explain why a stock is down, but expects the bad news to continue to infinity. Thus, he is clueless as a predictor of the future. With his Green Mountain call, he is probably the "Worst Timer of the Century", as that stock was the "Buy of the Century" at the same time he was calling it the opposite. Please forgive me if I take comfort in his warning to stay out of momentum stocks at this time.

    Disclaimer:

    The thoughts and opinions in this article, along with all stock talk posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Disclosure: I am long HALO, ANGI, BITA, KING.

    Apr 13 12:26 PM | Link | 1 Comment
  • All Halozyme Therapeutics, Inc. (HALO) Bulls: "Be Greedy When Others Are Fearful..."

    Warren Buffett said, "Be Fearful When Others Are Greedy and Greedy When Others Are Fearful." I opine that now is the time for Halozyme Therapeutics, Inc. (HALO) bulls to be greedy rather than fearful, and buy into the current weakness. The ones who will buy HALO now when it is trading with a "7" handle and lower, should be richly rewarded in the future, in my opinion. The situation is anything but hopeless.

    Here is a posting I found on the Yahoo message board, click here, that describes some analyst reactions to the recent selloff in the stock. I will repeat the post here:

    Piper Jaffray analyst Charles Duncan said he expects the pancreatic cancer halt to be resolved in "weeks, not months" and that it would not hurt the broader technology platform as the dosing levels varied significantly from those of Hylenex.

    Jefferies & Co analyst Eun Yang maintained her assumption that the pancreatic cancer treatment would be launched in the United States and Europe by 2019, and generate combined peak sales of about $548 million in 2027.

    UBS maintains $14 price target. Thinks Hylenex Diabetes potential upside surprise. Gives $5 value to PEG but not changing estimate.

    BMO Capital analyst Jim Birchenough, M.D. is out defending Halozyme BMO Capital analyst Jim Birchenough, M.D. is out defending Halozyme Therapeutics (NASDAQ: HALO), which is down 29% after temporary halt of phase 2 trial enrollment and dosing for PEGPH20 in pancreatic cancer. "We believe HALO weakness represents an over-reaction to today's news given that PEGPH20 represents only ~$1.00/share in our NPV estimate for the company," Birchenough said. "Any imbalance in thromboembolic risk should be easily manageable with ASA +/- anticoagulant, as is done commonly with large cancer drugs like REVLIMID." He added, "Thromboembolic risk for an IV formulation of PEGPH20 has no implications for the broader PH20 SubQ platform and we continue to see upside to recent EU approvals of HERCEPTIN SC and MABTHERA SC." The analyst maintained an Outperform rating and price target of $24.00.

    HALO Is Approaching Significant Long-Term Support at $7.25, $6.50, $6.00 & $5.00

    (click to enlarge)

    The above weekly chart of HALO is updated through Thursday's close, 4/10/14. From a recent high of $18.18, today's low in HALO reached $7.29, a drop of 59.9%. The last major bull leg started last August at $6.51. The stock then rallied $11.67 over the next 5 months, but has given back 93.3% of those gains in the past 3 months. With Thursday's close of $7.49, the stock is just $2.49 from major support at $5.00. The last 3 times the stock bottomed at the $5.00 level or a bit lower, it quickly rallied back to $8.50. Should the stock fall to $5.00 again in the near future, it should also rally back quickly to $8.50. So anyone who buys shares in the $7, $6 and/or $5 area, should do just fine if they hold for that snap back rally. If you follow this company back over its history, it has had several of these short-term setbacks, and each time the stock recovered to a price close to where it was trading prior to the setback. There is no reason to believe that this time will be any different. If you liked owning the stock at $13 or $14, you should love owning the stock at $6.50 or $7.00. From the current levels, all speculative frothiness has been washed out of the stock, and it should start building a nice base to work on up to higher prices. At worst, the stock should base either at $7.00, $6.50, $6.00 or $5.00 and then rally $3 to $3.50 from the low and then trade back and forth in a trading range. If $6.50 to $7.00 holds the bottom, we could soon see $10.00. But if the stock continues to fall to its long-term support at $5.00, it should quickly recover back to $8.50, as it did three times in the recent past, as shown on the above chart.

    Disclaimer:

    The thoughts and opinions in this article, along with all stock talk posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Disclosure: I am long HALO.

    Tags: HALO
    Apr 11 8:41 AM | Link | 4 Comments
  • Angie's List Inc. (ANGI) Is Trading At Long Term Support

    (click to enlarge)

    If you look at the above weekly chart of Angie's List (ANGI), you will notice that $12 has provided tremendous support to this stock since it began trading in November 2011. In August of 2012, the support was broken and a low of $8.94 was scored. However, a couple weeks later the stock recovered to trade back above $12. Then it dipped down again a month later to $8.95 but in a single week, recovered to just under $12, with a high of $11.94. Eventually the stock rallied to a high of $28.32 in the summer of 2013. But recently it dropped back to the $12 support in November 2013, only to recover to just under $20 in early February 2014. ANGI has since fallen back towards the $12 support area, closing Friday, April 4, 2014, at $12.21, a gain of 22 cents on the week.

    I checked numerous articles written about this company and they are virtually all extremely negative. They say the company is broken and must formulate a new business plan to survive. I cannot comment about the fundamentals of the company, but the technical chart patterns look extremely interesting to me.

    ANGI Has Fallen From $20 to $12 in 8 Weeks With The 9th Week A Bullish Harami Pattern, Similar to What Occurred In April/May 2012 When ANGI also fell from $20 to $12 in 8 Weeks With The 9th Week Being A Bullish Harami Pattern

    Look at the high of $19.82 scored in the last week of March 2012, on the above weekly chart of ANGI. Then count forward and one will find an 8 week selloff with the 9th week forming a bullish Harami pattern. Remarkably, the same thing has now occurred over the last 9 weeks in ANGI. From a recent early February high of $19.80, ANGI has fallen for 8 weeks down to the same $12 support level and on the 9th week another bullish Harami pattern was formed. The last time this occurred in 2012, ANGI moved back to $16 within just over a month. I would expect a similar rally over the next month back to $16 to occur again, if we continue to repeat the previous pattern that I have identified. A remarkable coincidence to match the trading pattern in both time and price.

    It Is Very Difficult To Hang Shares In ANGI

    Now that we are back to the $12 support area in ANGI, I am ready to buy shares in the stock without any reservation. The reason that I am so positive is what I see looking at the daily chart of ANGI:

    (click to enlarge)

    When disappointing earnings came out in February of 2014, the stock opened just above $13.50, a drop of $3.60 or 21% from the $17.10 pre-earnings close. However, the stock was a buy on the dip and traded back to close at $15.93 that same day. The stock did roll over and eventually took out the $13.50 support level on Monday, March 3, 2014, hitting a low of $13.22. But the high of the next two days, was $14.00 and $14.03, so anyone who bought at the $13.50 support level, could get out at a profit. This pattern continued when the $13.00 support level was breached. Following a low of $12.93 on March 7th, ANGI traded to $13.70 the following day. Finally on March 24th, the stock decisively broke under $13, hitting a low of $12.17. However, the next day, a high of $13.09 was scored, making the buy on the dip quite profitable. A couple days later, a low of $11.81 was scored, and that was also a buying opportunity, as a high of $13.42 was reached a few days later. The last couple days have been weak, with Friday's low being $11.86. Buying just below $12 should again be an excellent trading opportunity as I anticipate ANGI will pop to the upside early next week. Should the $11.81 support give way first, all the better, as the snap back rally should be even more powerful, based on recent price action patterns in the stock. The key is to buy at support and then buy even more, once the support level is broken. Then within 24 hours one should expect to be able to sell not only the low priced shares at a profit, but one should be able to sell the higher priced shares at a profit as well. I call this feature "resiliency". ANGI is surely one of the most resilient stocks trading presently, making it an excellent candidate for scalping or swing trading from the long side.

    Seasonal Patterns Support Social Media Stocks Right Now

    I found the chart of ANGI when I was researching Twitter (TWTR). Here is a current weekly chart of Twitter that is also quite telling:

    (click to enlarge)

    Look at the above weekly chart of Twitter (TWTR) and you will see some surprising symmetry. When TWTR began trading in early November 2013, it rallied 8 of the first 9 weeks. Then the next 4 weeks were down, up, down and then up. Since early February 2014, we have since dropped 8 of the next 9 weeks. We have now matched to the downside, what was accomplished in the first 9 weeks, to the upside. There is no reason for TWTR to fall any more, and I anticipate that over the next 4 weeks, we could close up, down, up, and then down. After that, do not be surprised if TWTR then rallies 8 of the next 9 weeks. This could all be hocus pocus, but I will be watching the stock closely to see if this symmetry continues in TWTR.

    One more interesting point about TWTR is that it has fallen 3 days in a row and rarely does it fall 4 days straight. Thus, it is highly likely that it will close up on Monday.

    Also, TWTR and ANGI are both part of the Global X Social Media Fund ETF (SOCL). Here is a weekly chart of SOCL:

    (click to enlarge)

    Looking at the weekly chart of SOCL, one will notice that we have fallen for 4 straight weeks. One year ago, SOCL fell during these same exact 4 weeks, scoring a major low the first week of April 2013 at $13.41. From that low, SOCL has rallied consistently to the $23 top that was hit just 4 weeks ago. I would not be surprised if we are again near a significant low in SOCL, especially since ANGI is at major support at $12 and TWTR is approaching significant support at $40.

    Not only was the first week in April of 2013, a down week, followed by an up week, but the first week of April in 2012, was also a down week, followed by an up week. I am looking for next week to be an up week for TWTR, ANGI and SOCL.

    Disclaimer:

    The thoughts and opinions in this article, along with all stock talk posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Disclosure: I am long TWTR.

    Additional disclosure: I plan to buy ANGI within the next 72 hours.

    Tags: ANGI, TWTR, SOCL
    Apr 06 8:45 PM | Link | 2 Comments
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