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Confessions of a Biotech Investor

Recently I purchased a small position in MannKind (MNKD) on a pullback, cost basis 10.03 a share. Seemingly went up everyday. Then, it fell off the cliff. A FDA request for additional information and it's interpretation tanked the stock. Down 24% in one day, it has continued to selloff. Currently down nearly 40% from my original buy point and it has no signs of slowing down. While I have no special insight into the workings of the FDA nor the drug, Affrezza, up for approval, I have to say that the market reaction is wrong in my opinion. I will double down if it falls to or below 5.50 a share.

I understand this is a very risky proposition, especially from a technical analysis standpoint. All I can say is I've got a very strong gut feeling that it gets approved with few if any hitches. I'm following my gut this time....

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Random market thoughts

While running a simple screen for Cheap Growth stocks, I had something unusual happen. There was not a single stock that met the criteria. That's right, zero, zilch, nada. The screen only had three criteria; a PEG ratio of .75 or lower, a debt to equity ratio of .8 or lower, and an expected growth rate of 25% for the next 5 years. Only two possible conclusions can be drawn from this. Conclusion A, growth stocks are way over valued at this time. Conlusion B, analyst estimates for earnings growth are still very bearish, too bearish in fact.

My past experience with this screen leads to me too conclusion B. I started using this screen six months prior to the beginning of the bear market. At that time, there was no shortage of cheap growers. In fact I had to add a market cap component to reduce the number of possible candidates. Since the screen depends heavily on analyst earnings estimates and considering the events that occurred half a year later, I would conclude that…

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Added 3/30/10: I have discovered…

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UNG Hourly Chart

Since some of you trade NG and UNG, I thought I'd put some Fibonacci on it and see what it looks like. This is the hourly chart. From the 02/08 high, notice that XA drops to a previous support area. The rally AB retraces .786 of XA. The BC selloff takes out the low of XA and extends 1.618 to today's low. There is also a Fibonacci time target right here that I didn't label. It should rally from here and try to fill that gap. However, what I'm concerned about is that we closed below the Jan 28 low. Momo still down. If a rally attempt to fill the gap fails and today's low is taken out, it will probably extend 2.618 which would take it down near 8.70..

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QQQQ - Weekly Ichimoku Chart

The QQQQ's have held the red Kijun(Trend Line) for three weeks. Last week it managed to close higher after the previous weeks doji and also managed to close above the 20wk ema, a commonly used mav on Ichimoku charts. Next resistance is the light blue Tenkan line around 44.38. It looks constructive at this point although the blue 90wk mav is still ticking lower. What I would like to see next week is a move higher with a weekly close above the high of the previous red candle. I would appreciate any and all feedback.

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Admin

Pring Turner Capital Trend & Outlook

Came across this presentation @ tradersnarrative http://www.pringturner.com/newsletters/tsa.pdf and believe you would all find it very interesting as they outline where they believe the market is at and where it is headed in 2010. Doesn't make them right, but lots of good info. Short story, they believe we should be selling financials and consumer discretionary at this juncture and materials will be the place to be in 2010. At least for a while.

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Admin

Big Banks: Going Where No Bank Has Gone Before

Oh, the controvery over the proposed bank tax is getting good; get your ringside seat tickets now - they're going like hotcakes. This was my thought this morning as I awoke to this WSJ article on banks hiring a Supreme Court litigator to investigate whether the Obama administrations proposed tax is unconstitutional "because it would unfairly single out and penalize big banks. LOL Oh, put me in [office] Coach! They also don't feel they should be held accountable for the billions of losses incurred by nonbank recipients such as AIG, GM and others but one must wonder if GM would've been in the mess they found themselves in if it weren't for the economic meltdown.....but I digress. For the…

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