Bye, NBIX

Well, I just sold position in NBIX because I just ran out of faith. I was a pig- I should have sold above $10.00, but watched it slip back down. So, in the end, I went from the longest holding period to the shortest holding period I’ve had with a stock. Strange.

Anyway, there’s still a few hours left for NBIX to make a move, and currently it’s making me look bad (should have sold it 10 minutes later). But that’s how it goes. Sometimes you the market gives you something extra, sometimes you miss out.

As for my old pick, Medifast (MED), it’s making a sweet comeback on the intraday charts. Maybe I should have played that stock.

Ah!! I’m all over the place- I’m going to sleep.

I just sold my largest holding in my portfolio, Master Card (MA), today. I believe that’s the longest I’ve ever held onto a stock. I then immediately used the cash to buy Neurocrin Bioscience (NBIX) after it got hammered yesterday after hours when the public found out Pfizer (PFE) will not be working with them and their new sleeping pill. Talk about market overreaction!! Just because PFE doesn’t want to work with NIBX, it doesn’t mean the product is bad.

Okay, so NBIX is having an unexpected difficult time bringing their product to the market (FDA will review them), but come on! The FDA didn’t reject them. To make sure the market agreed with me, I checked the buy to sell ratio and there is heavy buying- about 3:1.

Anyway, got to get back to the ticker… looks like NBIX is losing momentum at the moment. I’m hoping to stock at least gets to $10.00.

Oh the good ‘ol boys at StockLemon.com took a fat shot at Medifast. If you track StockLemon, then you know whatever this site publishes has a huge effect on a stock’s price. Anyway, StockLemon was right on again, pointing out that Sanofi-Aventis EU approval for obesity drug Acomplia occurred just hours ago. Who are these guys? How do they get in on the news so fast?

Medifast currently is down over 20%!

But the arguments were not as harsh as usual. StockLemon didn’t talk about any scandals occuring within the company, but talked about a much lesser evil… competition (ie, a diet pill vs packaged foods). So is MED a bargain now? It hasn’t been a bargain for a while! This was a pure growth stock, with appreciation fueled by future earnings. So the guys at StockLemon hit MED in a vital spot. Currently there are more sell orders than buy orders, so even the overall market doesn’t think MED is a bargain after a 20% plunge.

And in a matter of hours, I myself have to downgrade this stock from bullish to bearish.

Today I watched the market rally nicely. Yes, there are ugly rallies, then there are nice rallies. If you watch the charts of the Dow, Naz, and S&P you’ll notice nice steady rise. From a pyschological perspective, I can imagine majority of investors are putting money in one after the other. How’d I come to this conclusion? Simple, the light volume we saw on Monday was a “sideline” day, and now that we’re midway through the week, the coast looked clear. Yes, investors were searching for any news to feed on, good or bad. Today we had good news from big companies so that seemed good enough to spark a rally. So there we have it- we had a rally on bad news (CPI data last week), and a rally on good news (earnings window dressing), now all we need is that elusive “rally on no news” that completes a confident and solid bull run. When the market rallies on no news, then you know that people are investing in fundamentals- the way it should be.

Anyway, I’ll be taking the week off early since I’ll be camping this weekend. So, I’ll just check in at the close to see any swing trades I can make for the rest of the summer. I’m sort of mad at myself for not catching Medifast (MED), since I knew it would “return back to low teens” before taking off to new highs. Anyway, I’m looking for a new entry point- anything below $20 and I’m in! Here’s my best candidates for my next trades, I’m treating this as a basket trade, so as a group I’m hoping to get a descent gain (some may fall hard, but majority will rise):

• Medifast (MED)– Buy Limit < $20 / Sell target $25 / Stop loss $17.00
• LifeCell (LIFC) – Buy Limit <$28 / Sell target $32 / Stop loss $25.50
• Sirenza Microdevices (SMDI)– Buy Limit $11.00 / Sell target $15.00 / Stop Loss $10.30
• Komag (KOMG)- Buy Limit < $42.00 / Sell target $46.00 / Stop Loss $38.00

Many of these stocks are on the brink of becoming popular on the street, so I’m hoping to get in before everyone else does. Plus, each of these companies have great products in strong industries.

A friend of mine came up to me two weeks ago asking how to short. I was thinking, you should have asked me that question a month ago. Anyway, I was reading through TraderMike’s blog and came across his very own bullish indicator- he checks to see how many people are searching his site on how to short stocks. This is a contrarian indicator: When people start looking for ways to short, it’s time to go long. It’s amazing how true this is. It seems like majority of investors are late adapters, or maybe I should say “too late adapters.” By the time everyone catches on they’re too late… a classic bear trap. What makes this worse is how shorting works- when you short sell a stock, you have to buy the stock back, which can cause accelerated buying which catupults the stock (best recent example- TravelZoo TZOO)… this is called a short squeeze. Believe me I’ve been in that trap before.

Anyway, since last week I’ve “taken the bear suit off”, but haven’t put on any bull suit yet. In my opinion, we’re at the point where the risks doesn’t favor eitheir side. That “point” really frustrates me… I mean, just look at what happened to the Dow today.

The following stocks have been falling on relatively low volume after moving fast up on momentum with high volume. Usually this is a sign of the end of a run, and the beginning of a gap down.

• CRZO – 571,000
• PRLS – 661,163
• BOOM – 424,971
• JOBS – 174, 204

The following stocks have a significantly huge sell-to-buy ratio, meaning there are a great number of sell orders than buy orders. You can think of this as a supply-demand scenario, where eventually the stock price has to meet where the two intersect.

• PEIX (4:1)
• TIE (4:1)
• ERS (3:1)
• ET (2:1)

Weakest Industry: Manufactured Housing -18.4%

Horrible Performing Stocks This Month (interestingly, the last 3 had their IPOs in the past month!):

• Infosonics Corp (IFO)
• Basin Water (BWTR)
• Vera Sun (VSE)
• Vonage (VG)

… just me and my radar. Can’t watch every stock, but these are the ones that stick out.