WED. DEC. 15- Preventing "Prevent Defense" A couple of mornings ago, I was speaking with a colleague who started trading a few months ago. After a little âgetting used to itâ period, he actually had a relatively sustainable period of success. To his absolute credit, he didnât go nutso with his trading in not letting anything get to his head. However, as is inevitable with all traders, he suffered a bad day a few weeks ago. This created an issue. Many people would simply double or quadruple their trade size in an effort to get everything back. He did not. Other people would fail to adapt to changing circumstances in trying to stubbornly trade the same exact way with the same size. He did not. However, he has fallen into what I call the âprevent defenseâ trap (which his actually the easiest of the three to break). In football, for those who know the sport (much less those who donât), everyone knows of the term âtouchdownâ and the myriad of ways to get one. What people donât discuss is how to stop a team from scoring a touchdown. The good defenses are aggressive no matter what. However, particularly when teams are ahead late in games, they go into âprevent defenseâ mode, i.e. the thought that by not giving up a big pass, it lessens the likelihood of allowing the other team to score. While there are selected instances whereby a team uses up a lot of time to score, many times, the same result happens- a team scores anyway in the same amount of time simply because a series of short gains are made. Thus, my moniker for it at least 1 of every 3 times is âprevent the winâ defense because in an effort to be conservative, many times a team can lose the game because of it. I give the very long analogy to demonstrate as clear a relevant tenet to trading as I can because the same principle applies. While it is not good to be overly aggressive if things are not working out, it is also not good to play scared for an extended period of time because of a fear things will keep not working out. If your trading relies on split-second timing and you hesitate, youâll miss out on trades. If you are doing trading which requires you to stay in perpetual motion, you canât just totally stop or pull back dramatically. What I do after a hit is to simply cut down on my trade size until I get a rhythm going. Once I do a few successful trades, the greed component kicks in over the fear as the confidence creeps back. But I donât just stop pushing buttons nor totally refrain from what is I am trying to accomplish. So, if you take a sudden shock hit, realize after taking a little time to suck it in that many more trades lie ahead and the focus should be on the future. Trading is an odds gameâ¦sometimes things wonât go right. But from a purely scientific approach, if what you are doing works most of the time, youâll be fine as long as you do, well, what it is youâre supposed to do. Thus, fully understand that- and let that thought pervade your psychology rather than excess nervousness of taking another massive loss otherwise what will happen is that youâll find yourself taking a series of small losses rather than the one big one- youâll wind up in the same place only over a longer spate of time. Markets overnight in Asia were thoroughly disparate in performance with Tokyo flat but Hong Kong was down 2%. Markets in Europe were lower as well with London down 0.3% and Frankfurt off 0.7% amid rumors that Spainâs debt will soon be downgraded. Commodities are down across the board with oil and gold trading off by about 1% each. The dollar is marginally stronger against the euro and yen but well off of its highs. Bonds are ahead, but have given some of their strength back as well. CPI came out generally in-line with the Empire Manufacturing Survey better than expected (10.6 vs 3). Industrial production (0.3%) and Capacity utilization (75.0%) are out at 9:15AM. NAHB Housing Market Index (17) is out at 10AM with Crude Inventories due out at 10:30AM. After all of this, futures are very slightly lower. Stocks seem to be trapped in a range; there is a ceiling as evidenced by the two afternoon sell-offs recently plus the lack of major news but certainly a floor underneath as the government conducts its operations and money managers try to pad their performance. For the day, itâs likely that stocks will remain rangebound with no major move either way. The focus will likely be on earnings plays (such as JOYG), the solars on the heels of FSLRâs numbers last night, the media mention plays such as POT, and relative weakness/strength plays which can really move on the whiff of any market movement. Reiterating- If the whole story is not there - If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified. If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified- Good- The following stocks have good news and/or a strong technical pattern SAM- raised earnings guidance FSLR- raised earnings guidance BSDM- closed near a high after launching its MicroThermX microwave ablation system SRDX- named new CEO and exploring options for pharmaceutical unit MNKD- closed near a high VMC- closed near a high IBM- closed near a high LULU, DECK- featured on âMad Moneyâ last night POT- featured on Fast Moneyâ last night MCBC- closed near a high CYPB- closed near a high after receiving (and rejecting) a $6/share bid from Ramius; accepted $6.50/share takeover bid this morning from Ramius JOYG- good earnings ACL- reminder of companyâs stock to be acquired by NVS for $168/share EPCT, NVS- announced start by NCI of phase II trial with Crolibulin in anaplastic thyroid cancer Bad-The following stocks have bad news and/or a weak technical pattern CBST- lowered revenue outlook on weak Cubicin demand APKT- closed near a low CTRP- closed near a low MA- closed near a low IVX- announced stock offering LXP- stock offering VECO- closed near a low after a brokerage downgrade GS- closed near a low LFT- closed near a low OVTI- closed near a low MIPS- closed near a low SAFM- closed near a low after posting earnings TGA- closed near a low on weak drilling results HCP- 40 million share offering at 32 Earnings: WED DEC 15 BEFORE JOYG WED DEC 15 AFTER ABM AIR Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President
THURS. DEC. 16- Re-living A Trading Day A few days ago, one of the nicest people on the planet made a post on our chatroom in which he noted that he was âsorry to have spoiled a perfect gameâ as all of the traders that day except him were at least marginally profitable and much more importantly, he noted that âmaybe tomorrow (he would not) feel like such a loser.â That post really got to me; we are traders for a career to put food on the table and roofs over our heads, but we are human beings first and foremost. I asked him to tell me his best trade and his worst trade of the day. After three minutes of banter, all I got was that it âwas not so much what I did or didnât doâ¦I know where I made my mistakes and what I should have done that I didnât do.â Well, how is that possible if one does not look at oneâs trades? Now, the dialogue went on for awhile and he came around and figured out what he did wrong after a half hour of dialogue in happily recognizing a very easy correctable mistake in stating âOK, some day I will look back at this and maybe laugh, because I know I can do this; I have the will the drive and the thrill of learning something new.â Now thatâs the spirit! Putting my trader hat back on, I found it mind boggling that to get from the original comment to the last positive comment, I had to literally verbally force this otherwise fine individual to simply look up his trades for the day. You see, it is extraordinarily important to not obsess over oneâs trades, but a healthy dose of self-analysis of oneâs psyche and trades is the only way one can truly see what one is doing right and wrong. I spend about 15-45 minutes each and every day in entering the numbers from every single one of my previous dayâs trades on a spreadsheet. As I do so, I re-live the previous day as I do the work; I typically do this at lunchtime when it is slower and/or after the close when itâs not earnings season. Every so often, I also look at the last monthâs worth of trades as well as the last yearâs worth of trades so as to compare what it is I am doing now compared to the other spates of time. How else am I supposed to see patterns where I win or lose if I donât look back at my own trading activity? A few months ago, the president of the firm took it upon himself to print out sheets in which he encouraged people to mark down their trades along with why they did them. He also told anyone who did it to feel free to come to him to discuss the trades. We both found it perplexing that not one person took him up on the offer. As traders, we tend to focus upon what we do right and wrong- equally- and coming out of it a bit more intelligently and with a good attitude at that. So, while I donât do a ton of things right, I do feel like I have it spot on when I advise everyone who does not do it to make it a resolution this year to spend time truly analyzing and thinking about their trades. Seeing the same mistakes (and winners) certainly gives me a clue as to what to do and what not to do in the throes of trading battle and it will help each of you as well. Markets last night were flat in Tokyo but down 1.3% in Hong Kong. In Europe, prices are generally flat. The dollar is slightly stronger with gold and oil both down around 0.5%. Bonds are rebounding a little. Jobless claims came in a tinge better than expected with deficit data in line. Housing starts were a little weaker than expected. Phily Fed (12.5) is due out at 10AM. Futures are marginally higher. Odds seem to favor another quiet session with a slight bias to the upside. The focus will likely be on the earnings plays (FDX), banks on the BAC news, and the myriad of small cap momentum plays moving around yesterday. Reiterating- If the whole story is not there - If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified. If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified- Good- The following stocks have good news and/or a strong technical pattern AIR- decent earnings TQNT- selected by Samsung for 3G RF Front-End of new Galaxy tab MLHR- decent earnings BAC- rumored to be in talks to settle dispute with large mortgage investors MDRX- featured on âMad Moneyâ last night HEI- decent earnings NDSN- decent earnings YOKU- closed near a high SKH- closed near a high after an upgrade CYBX- closed near a high after the SEC closed its stock options probe without action EXEL- closed near a high VRSN- closed near a high SRDX- closed near a high after naming new CEO and announced intentions to sell its Surmodics Pharmaceuticals business WYNN, LVS- upgraded by JP Morgan WGO- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern SCLN- poor phase 2b clinical trial results of SCV-07 XUE- closed at an all-time low FSLR- closed near a low in a reversal after posting earnings guidance FFIV- closed near a low BIDU- closed near a low V, MA- closed near a low MOTR- closed near a low after it officially filed for a secondary filing GS- closed near a low FCX- closed near a low FDX- poor earnings Earnings: THURS DEC 16 BEFORE ATU DFS FDX GIS PIR RAD WGO THURS DEC 16 AFTER A.CN APSG ORCL RIMM SCS SMOD TTWO ZQK Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President
FRI. DEC. 17- The 3rd Friday In December The calendar says that the last day of the trading year is December 31. However, for many traders, today is the last day of the year. Historically, the last two weeks of the year are the lowest two weeks volume-wise almost year-in year-out. A lot of people take off the last two weeks for Christmas week and then particularly New Yearâs week to enjoy well-deserved (well, in some cases) vacations. Furthermore, traders/funds who are monetarily ahead substantially oftentimes donât want to change up their year total for reasons from mental purposes to tax purposes to relative performance reasons. There are immediate-term implications as well as implications for the next couple of weeks. First, today. Today is a quadruple options expiration day thus a slew of volume historically occurs on the 3rd Friday in December. Also, many traders put their final plays on so there can often be displacements on the bell, i.e. if a fund wants to show it is in (or out) of a particular stock. Also today, there will be a slew of index changes on the close with numerous stocks going to various indexes. Finally, the 3rd Friday in December is usually the general end of the yearâs news cycle business-wise as few companies report earnings Christmas Week or the week before New Yearâs much less make major corporate developmental news as so many analysts arenât around. The next two weeks, as Iâll discuss more in a couple of days, despite the likelihood of lower volume, have the propensity to be great trading weeks in rampant bull markets. Small cap stocks much less all stocks can have exaggerated moves on the whiff of any news and there are often money managers who are chasing performance. Thus movements can become exaggerated. Thus, just because weâre around the holidays doesnât mean itâs time to close up shopâ¦personally, I feel the next two weeks will offer prepared day traders many opportunities due largely to this wonderful tape. But so will today. Markets in Asia were lightly mixed with Tokyo down -0.1% and Hong Kong up 0.2%. In Europe, prices are generally lower with London down 0.2% and Frankfurt off by 0.4%. Oil and gold are both down slightly, the dollar is flat, and bonds are marginally ahead. The big news of the night was a 5-notch downgrade of Irelandâs debt by Moodyâs, but itâs been largely greeted wit ha yawn as it was widely expected. Leading Indicators (1.2%) come out at 10AM. Overall, the range for the broader indexes will likely remain narrow today but it will likely be a very active session with tremendous noise underneath the surface due to all of the factors written in this lead paragraph mentioned earlier. The focus will likely be on the earnings plays, the stocks in the merger arena such as MI, techs, the credit card entities, and the S&P changes late in the day. Reiterating- If the whole story is not there - If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified. If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified- Good- The following stocks have good news and/or a strong technical pattern RIMM- decent earnings ORCL- good earnings ACN- decent earnings TTWO- good earnings APSG- decent earnings ZQK- decent earnings SCS- decent earnings MON- closed near a high FFIV- closed near a high WLT- closed near a high CYH- closed near a high WYNN, LVS- closed near a high after a brokerage upgrade NYMX- announced European licensing agreement for NX-1207 SAPX- closed near a high DOLE- closed near a high ARO- closed near a high after hiring Barclayâs to help bar would-be buyers KND- closed near a high after raising earnings guidance BCSI- closed near a high after a brokerage upgrade NNBR- closed near a high ITMN- announced approval of Esbriet in Europe for IPF MI- to be acquired by BMO for .1257 shares of BMO upon closing Bad-The following stocks have bad news and/or a weak technical pattern SMOD- poor earnings RSYS- poor earnings V, MA, TCB- closed near their lows due to worries about the Fedâs rules establishing interchange fee standards DRIV- closed near a low MSB- closed near a low CRK- closed near a low after announcing its 2011 exploration and development budget YOKU, DANG- closed near their lows AEM- closed near a low VECO- closed near a low PKOH- closed near a low HSFT- 5 million share offering at 26 AZN- negative complete response letter from the FDA for Brilinta Earnings: None today Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President
MON. DEC. 20- Irrelevance You ever had a somewhat bad day just not care biochemically in that your mood didnât change? Doesnât happen often, but it happens. Conversely, ever had a pretty good day but you just felt, well, neutral to slightly blasé? Well, welcome to the last couple of weeks of the year as far as externals versus the equity markets in general. I donât have dense treatises to back up my claim, but suffice to say that the focus of traders is elsewhere. So, what tends to happen are a few things. First, many people take off. It is a slow time in the corporate world so with low news flow and kiddies off on vacation, many traders take very needed breaks. Second, particularly in bull markets like the one weâve had, many money managers do a lot of shuffling beneath the surface in window dressing and performance-related mechanics. Third, there tends to be a lot of speculation on low amounts of liquidity. With many people off, stock trading becomes a bit of a parlor game for many so movement can become exaggerated. Finally, circling back to the beginning of this piece, movements in the external markets (currencies, commodities, et al) tend to be more muted generally simply due to the dearth of participants and news. Furthermore, what movement there is in external markets tends to be largely ignored by the stock market with the focus again being on money managers sloshing things around as well as individualized stock stories. This said, itâs also a time to pay attention to the newswires as news events can be randomized with unexpected events such as the assassination of Pakistanâs former prime minister Benazir Bhutto on December 27, 2007 setting off a bit of a sell-off. So, expect nothingâ¦and expect everythingâ¦but donât expect the usual through the end of the year. Markets in Asia were slightly weaker overnight over worries on the Korean peninsula with Tokyo down 0.9% and Hong Kong off 0.3%. However, after North Korea brushed off South Koreaâs military exercises and nothing economically poor came out of Europe, the bourses rallied with Frankfurt up 1.1% and London 0.5%. Gold is modestly higher, the dollar is slightly stronger, bonds are a little bit ahead, and oil is up ½%. Thereâs no economic news of note. Futures are slightly higher. It is quite quiet with little news flow out there. Look for the positive bias to hold overall today on very little activity- movement and volume-wise. And get used to hearing a variation of that them for the next few weeks. The focus will likely be on the big momentum movers from Friday such as ITMN, stocks mentioned in the media such as IDCC, and A-B-A2 plays to the upside. Reiterating- If the whole story is not there - If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified. If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified- Good- The following stocks have good news and/or a strong technical pattern ITMN- closed near a high after the European Medicines Agency adopted an opinion recommending the granting of a marketing authorization for Esbriet in adults to treat idiopathic pulmonary fibrosis ATI- closed near a high after one of its units was selected to supply titanium for a large seawater desalination project FCX- closed near a high LULU- closed near a high AMRN- closed near a high MMYT- closed near a high ADES- closed near a high SKY- closed on a high amid a big buy order on the close on Friday EPB- closed on a high amid a big buy order on the close on Friday XXIA- closed near a high after a brokerage action HSFT- closed near a high after completing a share offering KNDI- closed near a high after announcing its new Kandi EV model was approved for a national subsidy in China IDCC, SWK, AEM- featured on âMad Moneyâ on Friday REGN- reported positive results with Bayer for its VEGF Trap-Eye in phase III study in central retinal vein occlusion as well as phase II study in diabetic macular edema APSG- to be acquired for $38/share in cash from RTN QCOM- sold wireless spectrum to T for $1.925 billion AEZS- announced agreement with the FDA on a special protocol assessment for Solorel LVS- announced it received a letter from the Macau land, Public Works and Transport Bureau in which its Macau counsel advises that the company should be able to start prepping for the sale of shares in co-fashion to prospective buyers in having a Four Seasons-branded apartment at the Cotai Strip in Macau CHTP- accelerates Northera FDA filing following meeting with FDA Bad-The following stocks have bad news and/or a weak technical pattern NFLX- closed near a low despite being added to the S&P 500 on the close in Friday Earnings: MON DEC 20 BEFORE JEF MON DEC 20 AFTER ADBE DRI JBL PAYX Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President
TUES. DEC. 21- Enjoying The Fun But Knowing What Could Happen We had a huge pecan tree in our front yard when I was growing up. When I say "huge," I mean there were autumn cleanups in which we'd have upwards of 60 brown paper grocery bags filled with pecans. I always think of that tree at this time of year because this is when we'd harvest them, give them to friends, and of course have our stash for a winter supply of pecan pie. I also remember the annual battles wit the squirrels. Boy oh boy could those things be vicious. What was always so annoying to me was how hollowed out some of the pecans would be and I'd have to have a separate pile for those because I didn't want to keep eaten pecans. But even then, I could never get too mad because I had an admiration for the mighty squirrel because besides eating about 1 1/2 to 2 pounds of pecans a week, they are known for being able to harvest/burrow/bury upwards of two pounds of the things a day! In winter, when there are no pecans, they need their harvest to survive. As the calendar turned to December and I sit in a trading room, I thought of that as I hear tales of people thankfully doing quite well in this fairly active and quite vibrant stock market. For that, I am thrilled. What I am not happy about is that many traders tend to forget the lean times when things are going quite well. I've personally heard of dozens of stories of traders who had it all- and then lost it all and more. One of the secrets to success in any business lies in fully realizing that no matter what, every day just isn't going to be a great day. Another major secret is in remembering what got you to that level of success- and not deviating from it. Instead, many traders tend to think the good times will last in perpetuity and start doing things they may not otherwise do simply because they feel so confident- much less acting obnoxiously and boorishly. Those tend to be the traders who are setting themselves up for massive falls. Thus, if you've been fortunate to have a recent run of success- particularly in this wonderful market- remember that although traders may have a higher intelligence quotient than squirrels, squirrels are indeed smart enough to know that lean times can come and the good stretches are there to counterbalance the stretches of smaller profitability. Markets overnight were higher throughout the world with Asia stronger on an easing (if ephemeral) in Korean tensions with Tokyo up 1.5% and Hong Kong ahead 1.6%. Stocks are nicely up in Europe too with London ahead 0.7% and Frankfurt 0.6%. The dollar is a little weaker, and oil and gold are up ½%. Coffee is at its highest level in 13 years with cotton limit up at a new all-time high. Futures are drifting higher amid a dearth of news and all of the positive buzz (and holiday spirit). Look for the gains to likely hold in quiet trade. The focus will likely be on the earnings plays (JBL, ADBE, et al), stocks mentioned in the media (such as NFLX on âMad Moneyâ last night), biotechs in the news (INCY), and A-B-A2 relative strength plays as long as the market stays quiet. Reiterating- If the whole story is not there - If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified. If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified- Good- The following stocks have good news and/or a strong technical pattern GS- closed near a high CHK- closed near a high after Carl Icahn built a 5.8% stake LVS- closed near a high amid rumors that they may be nearing approval to sell co-op shares in Macau INUV- closed near a high IDCC- closed near a high after being mentioned on âMad Moneyâ on Friday night AMZN- closed near a high ADBE- good earnings JBL- decent earnings PAYX- decent earnings LDL- received FDA 410(k) clearance for Cell Freeze storage containers INCY- announced positive top-line results from Comfort-1 Pivotal Phase III trial of INCB18424 in Myelofibrosis LCRD to be bought out by ASSA Abloy for $6.25/share in cash ARNA- closed near a high amid speculation the company is expected to have met with the FDA this month on its Lorcaserin drug CHTP- closed near a high after accelerating new drug filing following meeting with FDA PPHM- closed near a high after announcing it complete treatment of last patient in its phase II Cotara brain cancer trial USG- closed near a high FNGN- closed near a high EDAP- closed near a high after its Sonolith i-move received Korean FDA approval NFLX- featured on âMad Moneyâ last night MEE- considering multiple bids according to âThe Wall Street Journalâ EPCT- announced Ceplene approved for marketing in Israel MATK- to be acquired by DSM for $31.50/share WBC- raised earnings guidance MCP- announced agreement with Hitachi Metals to pursue formation of joint ventures to manufacture rare earth alloys and magnets KMX- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern ULTR- closed near a low after unveiling a $60 million note offering RIMM- closed near a low DRI- poor earnings ROC- share offering DANG- closed near a low LQDT- closed near a low Earnings: TUES DEC 21 BEFORE CAG CCL CMC KMX TUES DEC 21 AFTER CTAS FINL HOV NAV NKE RHT TIBX Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President
I'm sorry, but with all due respect you have very little idea of what you are talking about with regard to a secondary offering, let alone the actual Validation Study results of Cologuard. First off, for those that aren't aware of the rally that the share price of EXAS has seen this year . . . the stock took off at the end of August in the low $4.00 area right around when the AACR abstract submission deadline was. The stock then proceeded to rally up to $9.24 just prior to pulling back to the low $7.00 area before one more blast back up to $9.19 before the Company presented their Validation Study results for their stool DNA test for colorectal cancer screening. Once the data was disseminated, many traders/funds decided to SELL THE NEWS given the 125% rally in the share price. Moreover, even though Exact Sciences (EXAS) announced their 10 million share offering (with an option for another 1.5 million shares if oversubscribed) several days after the announcement of Validation Study data was released on October 28th, there were four brokerage houses that were very well "aware" of the Company's interest in a floating a secondary offering within days of the data release. If you think that these firms did not "prepare" themselves for the upcoming secondary priced at $6.00 per share, you are even more naive in how people play this "game" than I initially thought. As for the Validation Study results and the performance of Cologuard . . . you mistakenly believe that there are OTHER colorectal cancer screening tests in the market place that are non-invasive AND test for PRE-CANCERS. The fact of the matter is that there are not! You also naively claim that an invasive procedure such as colonoscopy is nearly 100% effective in identifying colorectal cancer, let along pre-cancers. You couldn't be more wrong. Large studies over the past couple of years in Canada and Germany indicate that the once thought of "gold standard" Colonoscopy . . . is anything but. For example: For the study, the researchers looked at the health records of more than 10,000 people in Canada who were diagnosed with and died of colon cancer between 1996 and 2003, and the records of around five times as many people who had not died of colon cancer during the same period. The researchers measured how often each patient had had a colonoscopy and then compared the chance of dying of colon cancer after having the procedure with the chance of dying of the illness if no colonoscopy had been done. The calculations were also done separately for cancers in the left and right colon. What they found was a "large mortality reduction" for cancers on the left side of the colon, but essentially no reduction in deaths for lesions on the right side. "The study should caution physicians about saying that colonoscopy will reduce the risk of dying from colorectal cancer by 90 percent. A 60- to 70-percent risk reduction rate seems more reasonable," said David Ransohoff, a medical doctor and professor of medicine at the University of North Carolina. Among possible reasons why colonoscopy is less effective in detecting right-side cancers, the researchers hypothesized that polyps and cancers in the right and left sides of the colon may differ biologically, that right-sided polyps could be harder to detect, or that the right side of the colon might not be completely examined during a colonoscopy. http://www.google.com/hostednews/afp/article/ALeqM5jxc0UPlqxk_m6k4erdUk-xDvs3Sw The reason that Colorectal Cancer is the #2 killer of Americans over the age of 50 is because not enough people get screened. They don't want to have to take a day off of work, be probed in such an invasive manner, let alone have to go through the arduous task of bowel prep the night before in which one drinks 8 ounces of cleansing fluid every 10 minutes for up to 2 hours. Meanwhile, Colonoscopy is not the end "all" and be "all" in detecting the flat lesions (adenomas) that are commonly found in the descending portion of the colon as the study above in Canada, concluded. Currently, the only other screening device that Americans use ( some 12 million annually ) is the FOBT/FIT test which simply tells the patient whether or not they are bleeding out of their ass. There is very little sensitivity to detecting cancer with this test. The SPECIFICITY is horrible. If you are in fact bleeding because of colon cancer, you are most likely already in Stage 3 or Stage 4 where your chances of survival are greatly diminished! With FOBT/FIT the patient smears their feces onto a piece of cardboard on 3 different days of the week. As you might well imagine, there is not a lot of compliance with this screening test. Cologuard by Exact Sciences will most likely be used once every 3 years or so (depending on family history) and simply require an 8 gram piece of poop deposited in a test tube, and sent off to a lab via a USPS mailer. It will cost about $300 and have 55-65% gross margins. In my opinion, this non-invasive colorectal cancer screening test with HIGH sensitivity and HIGH specificity ( no false positives ) for cancers as well as pre-cancers will virtually REPLACE the absurd FOBT/FIT test that 12 million Americans already take. If one tests positive using Cologuard the patient will be recommended for colonoscopy. Feel free to do the math at $300 per test, 12 million tests, gross margins of 55-65% and 52 million shares outstanding. Then put a 20-25 times medical diagnostic multiple on it and let me know what you come up with. Like I indicated in my first post... You need to get your facts straight!
Two Halves Still Equal A Whole I have two decent analogies to start this one and as a heads-up- this piece is particularly aimed at some of the newer traders to this day trading game, but it's still a good reminder for all of us- particularly me. As my mind is still on the last vestiges of my kid's Halloween candy (well, whatever hasn't been eaten or given away already), I couldn't help thinking about the argument my two kids had two nights ago. There was a mini-size Kit Kat which had two bars. I gave my older daughter (Rayna) a complete stick. However, while I did the same for my younger child (Samara), I broke it into thirds for her so that she wouldn't try to put the whole piece of candy in her mouth. Apparently Rayna missed me chopping it up and thought Samara had more than she did and threw a fit. I had to explain to her it was the exact same thing...they each had the same amount but her piece was not chopped up. Eventually, she understood and actually spent much of last evening marveling at yet fully comprehending her newfound knowledge of division- how things can be spilt up yet be the same. The 2nd principle involves laundry. I am one of those very simple kids who still marvels at some every day things and machines. I personally feel, for instance, that the airplane was the greatest thing ever invented. The fact I can travel 3,000 miles away in five hours on a commercial flight boggles my mind. In any case, I always found myself staring at the laundry whenever I've gone to a laundromat just watching the clothes in motion. Furthermore, although I don't do it at home, I still get into arguments with my wife over things like drying some stuff on low twice versus doing it once on a higher setting and chancing having it shrink. All of this leads to a point. Particularly with the market ascending the way it has, there is a bit more intra-day movement as prices have increased (i.e. a 10% decline on a 50 dollar stock is nominally more than a 10% decline on a 20 dollar stock). There's also a lot more intra-day price noise due to the increasing prices as well as the trickle back of some speculators. So, for me, my volumes have gone down a bit in the last few months but I aim to get a bit more out of the position. For instance, whereas I'd routinely trade 2,000 of JKS a few months ago in the hopes of making 20 cents or so a share, I'll now do 1,000 but I know it can go 40 cents rapidly if I play it at the right time. Furthermore, I know if I do 2,000 shares and I am wrong, there is a shot of getting hit a lot worse in a lot more rapid fashion. Thus no matter your style of trading, realize that when prices are moving around a bit faster, there's no shame on paring back your trade size in an individual trade if you can potentially get more movement out of it. First, with the increasing movement comes more opportunities. So by staying nimble, there are that many more chances to get in and out to make even more money these days. And second and more important, last I checked a 1,000 share position on a 40 cent move on JKS earns me the same amount of money as a 20 cent move on 2,000. So, yes, the very simple counterargument is that if there's the possibility of getting 40 cents rapidly, shouldn't I trade the same amount of shares as before? And I say no because inherently most traders hold on to losing positions longer than the winners in the (oftentimes vain) hope that their positions will come back ergo when wrong in this tape, one can get blistered even faster. Thus the bottom line is that when the markets are a bit more volatile in the individual stocks one trades, expect more movement and realize that one of the key secrets to immediate-term day trading is knowing when to adjust trade size downward (as well as upward) and to be in constant motion for the burgeoning opportunities presenting themselves. Markets overnight were relatively quiet worldwide with Tokyo down 0.2%, Hong Kong up 0.2%, London ahead 0.1%, and Frankfurt flat. Gold and oil are slightly higher with the dollar a little lower. Thereâs a good bit of economic activity today with GDP (2.7% expected) out at 8:30AM, Existing Home Sales (4.65 million units) at 10AM along with the FHFA Home Index and crude inventories out at 10:30AM. Stocks seem to be in full-on holiday mode this morning with less than a one point range on the S&P 500 futures in the last couple of hours (it is just before 8AM as I finish writing this). Stocks will likely drift on both sides of unchanged much of the day on low turnover. The focus will likely be on the earnings plays (NKE, et al), the small biotechs in the news such as ARNA, and A-B-A2 relative strength plays particularly in the microcaps. Reiterating- If the whole story is not there - If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified. If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified- Good- The following stocks have good news and/or a strong technical pattern XOMA- closed near a high after a positive report from Summer Street regarding the companyâs prospects for its XOMA-052 diabetes drug NFLX- closed near a high after a positive mention on âMad Moneyâ on Monday night MCP- closed near a high after announcing a product deal with Hitachi Metals AIG- closed near a high AMZN- closed near a high PSDV- closed near a high GS- closed near a high WBC- closed near a high after announcing positive earnings TD- closed near a high after announcing purchase of Chrysler Financial AMED- closed near a high after a Deutsche Bank upgrade LAD- closed near a high after a positive note at Credit Suisse MYRG- closed near a high after a positive note at Wedbush and FBR TIBX- decent earnings YRCW- amended credit agreement and affirmed Q4 EBITDA expectation PRGS- decent earnings ACUR- closed near a high TEX- closed near a high ZOOM- good earnings guidance ARMH- rumor according to Bloomberg that MSFT reportedly shifting to ARMH chips from INTC and AMD Bad-The following stocks have bad news and/or a weak technical pattern CPY- closed near a low after posting poor earnings ORN- closed near a low after revising earnings guidance RDY- closed near a low NKE- poor earnings RHT- poor earnings XLNX- cut earnings guidance KNDI- closed near a low after announcing a share offering SCEI- 5.46 million share offering at 5.25 CPIX- FDA noted there wasnât sufficient evidence of efficacy regarding its liver treatment drug Earnings: WED DEC 22 BEFORE AM LNN WAG WED DEC 22 AFTER BBBY CBK MU Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President
Secondary offering- Iâve been in this business for a very very long time and do very much know what I am talking about on this particular score. I do not know if you have a position in EXAS, but as a completely unbiased individual, I am very correct. I get it re âsell the news.â I get it re firms âpreparingâ themselves. I just donât think you happen to be right for a couple of major reasons in your suppositions.. First, using Intermune (ITMN) as an example, the stock had risen from 8.55 in June to 14.38 (a multi-month high) as of December 16. When it released its news, it did not sell off as EXAS did; instead, it more than doubled. And yes, before you point it back to me, I know and understand thee is a huge difference between ITMN and EXAS as entities much less as stocks on a daily chart. But the principle is the same re âselling off on the news.â Second, âhealthyâ share offerings are not priced 30% plus in the hole from where a stock was three days prior. Typically, offerings are fairly close to the market albeit just below prevailing pricesâ¦not 30% below. EXAS clearly used the run-up as an excuse to raise capitalâ¦but if the news was that good with the demand that strong for the stock, the offering would have been priced much higher. For instance, it would not surprise me to see ITMN doing an offering at say 30-31â¦10% below current pricesâ¦but still more than double where it was a few days ago. Re the medical â I meant what I said- I am sure you know much more about the situation by a large margin than I do. Itâs not false modesty; it is me being honest. I am basing what I said re the âdarn near 100%â figure on the counsel of several doctors and some research but as I maintain- you clearly have done more work than I have on this topic- to your credit. Do me a favor- seriously- please post an example of another study (you can provide a link or six as I donât know enough to know which are âgoodâ studies and which are âbadâ studies). You can private IM me if youâd like although Iâm sure others would benefit from your efforts. This is one study (the Canada study) in which, for instance, I donât know the control conditions so for my own education, Iâd like to know more/see more studies. Re your numbers-I understand the math, but have no idea whether they are accurate or not as I have no position in the stock. Itâs like I said before- if you have a position in it, I wish only good things for you and for the company as what they are doing will hopefully help a lot of people. I conclude by reiterating that you do need to understand (if you donât already) what it is I attempt to do to scratch together a living in my trading. I have guiding principles and trade âfor better or worse- minute-to-minute rather than month-to-month. For me, I know if a small biotech stock such as EXAS has had a major decline after posting results of a test and it opens higher the next day, I want to short it thru unchanged on a few minutes of margin pressure selling from people who were too optimistic in the immediate-term on the companyâs prospects. Trading in this manner is what Iâve done for 23 years (14 full-time). Thus, I am certainly no expert on âinvestingâ (in EXAS nor anything else) nor do I claim to be; I just know enough to trade on in the immediate-term and earn a respectable living. Continued good luck and have a wonderful holiday.
I totally disagree. The stock got WAY OVERDONE on the upside (+125%) as the market place discounted the terrific validation study data ahead of time. If you knew anything about the Company, you'd be fully aware of the fact that management had been "guiding" investors to an 85% or better sensitivity for cancer detection, and at least 50% or better detection of pre-cancers. Your 30% "off the highs" of the stock is meaningless given all of the above - - - especially due to the FACT that this was ONLY a Validation Study and NOT an FDA Phase III clinical trial. Furthermore, your comparison with InterMune is like comparing apples and oranges . . . In fact, it's not even a close comparison at all and makes me really question your ability to conduct due-diligence. InterMune received EU backing by the European health regulator for their lung treatment drug, Esbriet last Friday. They now can launch the drug in Germany as soon as Q3 of next year and will most likely be profitable at the end of 2011. Meanwhile, Exact Sciences (EXAS) hasn't even started their FDA clinical trial ( it starts in Q2/Q3 of 2011 ) and won't likely have Cologuard approved by the FDA and ready for the marketplace till 2013. I'm amazed that you are so un-informed as to make such a wild comparison. One company is on the verge of launching their drug, while the other is 2 full years from launching their screening test. Of course investors took profits and sold the news in EXAS. They are nowhere near launching and still have to go through their FDA trial and application process. For some, the stock was ripe for profits and "dead-money" given that there is no near-term CATALYST. Again, it's amazing that you are unable to comprehend this. I don't believe that the "doctors" that you spoke with are GI docs, who would have a much better understanding of the fact that Colonoscopy is not as effective as initially thought in detecting colorectal cancer. You don't have to have a position in the stock in order to have a FACTUAL understanding of the colorectal cancer screening market. All of the studies and data that will answer your questions can be found here: http://www.exactsciences.com/
It's semantics, but the one point we'll have to agree to disagree on is the offering. Even if as you say mangement was guiding investors toward those numbers re the test, it should not have sold off 30% plus. But again, it's all philosophical because that is what happened (although the stock has only recently ticked back above 6). I know the test is not close to being approved (wasn't this the first study of an SDNA test which showed promising results?) but it just hammers home my point: the company saw an opportunity to raise capital and did it at a price they thought they could do it successfully. Two GI's and two general practitioners. I meant studies that are independent of EXAS media mentions. I can say anything I want and cite any study I want about day trading, but there are tons of other studies/facts out there. I was seeking something/anything on the specific topic that EXAS has not highlighted. I was hoping since you knew a lot more about it that you'd know where to guide me/anyone else interested.