Baby Biotech

We’ve seen the iShares Biotech Index $IBB have quite a run lately. The big names like $AMGN, $CELG, $GILD and others in the space have had some beautiful breakouts. Most, if not all of those names are still technically constructive and just appear to be taking a breather.

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iShares Biotech

What usually happens with these scenarios is a migration to the smaller names. Below are some of the junior biotech stocks that are getting some serious love lately and look higher. Please keep in mind that these names can also be “widow makers”, so be careful and use your stops. I am long MELA and KERX and may look to enter some others at better prices.

$MELA

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MELA

$KERX

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KERX

$AMLN

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AMLN

$HGSI

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HGSI

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Facebook Billions, Brussels and Data

ThurstonHowell Facebook Billions, Brussels and Data

“It’s a dangerous thing to confuse children with angels”- Thurston Howell

Germany finds itself in the same situation today. The country has become the rich Uncle that has bailed out the nephew (Greece) that constantly gets jammed up financially. You know, the guy that tapped his equity line to buy a 70” LCD TV in every room and maybe a small boat and a couple of BMW”s to dress up his driveway. The rich relative acquiesces and helps him out, he’s a good guy, only to find out that the dumb nephew then flies the family on a G-5 for a first class family vacation in Rio. The dumb nephew goes back to the rich Uncle for some more help. This time however, Uncle Rich guy is thinking about it, but going forward he wants total control of the nephews check book as he realizes his nephew is an an idiot and is incapable of even the most minimal austerity measures. The nephew doesn’t like this at all.

The gang meets today in Brussels and we may have some clarity on how this melodrama pans out at around 1PM.

Facebook $FB is filing its IPO this week and will list on the NYSE. Mark Zuckerberg will make about $ 20 billion, Accel Partners about $ 10B (they were the first fund that bet on Zuckerberg) Greylock Partners (Reid Hoffman of $LNKD and $GRPN fame) cashes in for about $ 1.5B, Peter Thiel of Paypal fame makes about $2.5B and Elevation Partners cashes in for about $1.7 B (Bono from U2 has a stake with them). And in the only thing Steve Balmer has done right in years, makes about $ 1B. Not personally, but from a $MSFT investment.

It will be an exciting week ahead as we will also see some important economic data as we move forward. The $SPY was fairly flat last week, so the bulls and bears are both wondering if that was only a pause that refreshes or sign of exhaustion with lower prices ahead.

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Ready For Anything

move 300x197 Ready For Anything

“When you see a fork in the road, take it”-Yogi Bera

So how will the market go this week? Will more silliness from Greece knock the underpinnings out of the tape? How about some home grown political uncertainty? The market was thinking Romney, now Newt is all the rage. The market hates uncertainty, especially of the political sort. The market wants Obama out and Romney was “the guy” to do it, so will a Gingrich lead take some starch out of this rally? I don’t care if you are writing in Ralph Nader or Casey Anthony for POTUS, that is a fact.

The euro is still more shorted than $SHLD or $NFLX were a few weeks ago. Is that rally getting long in the tooth or do we see a technical thrust higher for weeks to come? The market would love that, as the dollar will most certainly retreat further and send stocks even higher.

Are we overbought? Tom DeMark thinks so. He is only the guy that has called almost every top and bottom (so close its scary) in recent history. He thinks we top Monday or Tuesday. $AAPL also reports earnings after the close Tuesday.

It looks like Europe will go ahead with some sanctions on Iran next week. The Mideast, like Europe, never fails to surprise us, so that will be interesting going forward.

This tape seems tired to me. Volume is still uninspiring. Hedgies lost client money last year and they lie awake at night ready to piggy back any trend or trend change. They will have no aversion to selling quickly if we top and go lower. They are petrified of under performing again and will do what is necessary to protect any profit. The S&P was flat last year and many of them still underperformed.  Their mood changes can be both a blessing and a curse depending on what side you are on.

Earnings are still just warming up, even though the major banks are out of the way. $GOOG was a train wreck, but $IBM, $MSFT and $INTC were decent. All in though, earnings have been a disappointment for the fourth quarter. I do think that $AAPL will blow it out of the water on Tuesday.

Cliche Time…’Market’s can stay over bought” . They can also get decapitated when you least expect it. I always say charts look like Picasso’s until they don’t and right now many look that way.  I will never pick a top, but I can definitely be ready for one. Right now I know exactly what I am going to do if this tape goes into the wood chipper.

Good luck next week. If you would like to see what I will be doing for my subscribers, you can become a Premium Member here. If you would like to request performance, email: upsidetrader@gmail.com

 

 

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