Posts Tagged ‘Pharmboy’

Is it Feast or Famine at Johnson & Johnson?

Is it Feast or Famine at Johnson & Johnson?

Courtesy of Pharmboy at PSW and Phavorites of Pharma

Three women with a feast of seafood and fruit

Over the past few years, there has been a lot of talk about pharmaceutical manufacturing and persistant problems in quality control.  Genzyme, Schering Plough, are ones that comes to mind, but now Johnson & Johnson came under fire.  Manufacturing is a killer for any pharmaceutical company, as news breaks, companies scramble, and CEOs come on saying that everything is OK, and we are going to recall the product and get things fixed.  Unfortunately, those fixes take a lot longer than one would think, and in the case of a company as diverse as Johnson & Johnson (NYSE:JNJ), their current crisis is a good one.

Johnson & Johnson is a global American pharmaceutical, medical devices and consumer packaged goods manufacturer founded in 1886.  The corporation’s headquarters is located in New Brunswick, New Jersey, United States. Its consumer division is located in Skillman, New Jersey. The corporation includes some 250 subsidiary companies with operations in over 57 countries. Its products are sold in over 175 countries. J&J had worldwide pharmaceutical sales of $22.5 billion for the full-year 2009 represented a decrease of 8.3% versus the prior year.  Net earnings and diluted earnings per share for the full-year 2009 were $12.3 billion and $4.40. Full-year 2009 net earnings included an after-tax restructuring charge of $852 million and an after-tax gain of $212 million representing the net impact of litigation matters. Full-year 2008 net earnings included special items related to in-process research and development charges of $181 million with no tax benefit and an after-tax gain of $229 million representing the net impact of litigation matters. Excluding these special items, net earnings for the full-year 2009 were $12.9 billion. Diluted earnings per share for the full-year 2009 were $4.63, representing an increase of 1.8%, as compared with the full-year in 2008.

The Company announced earnings guidance for full-year 2010 of $4.85 to $4.95 per share, which excludes the impact of special items.

In 2010, a suit brought by the United States Department of Justice alleges that the company from 1999 to 2004 illegally marketed drugs to Omnicare, a pharmacy that dispenses the drugs in nursing homes.  JnJ is vigorously fighting this claim, but I think they will settle it out of court.  More recently JnJ has broadened their recall children’s medications for a manufacturing issue…
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Gilead – Not Your Run of the Mill Mid-Tier Pharma

Gilead – Not Your Run of the Mill Mid-Tier Pharma

Courtesy of Pharmboy

At PSW, we have been hemming and hawing about inflation/deflation, how to right Washington, oil exploration, solar flairs, irrational exhuberance in the market, and why Gilead (GILD) has lost its prominence in the market’s eye.  Experts say it is the company’s pipeline, as one of its flagship drugs is expiring in 2013.  Others allege that the company is being shorted by hedge funds because the short interest is currently trading at 1 day.  

Gilead Sciences, founded in 1987, is a leading pharmaceutical player, with more than 2,500 employees. With headquarters in Foster City, California, and operations spanning across the globe, it focuses its research and clinical programs on antivirals, antifungals and antibacterials.  Gilead’s portfolio of 13 marketed products includes a number of category firsts and market leaders. 

Gilead’s first significant entrant into the HIV market in 2001 was Viread (a nucleotide analog reverse transcriptase inhibitor, or NtRTI). Viread was recently approved for the treatment of chronic hepatitis B.  It was followed in 2003 by Emtriva, and then in 2004, Gilead’s current blockbuster product Truvada (a combination of Viread and Emtriva) was launched.  Gilead’s newest HIV product is Atripla, a combination of Truvada and Bristol-Myers Squibb’s (BMS) Sustiva, which has achieved rapid sales uptake since its launch in 2006.  Below are Gilead’s main income drivers, and as one notices, the HIV franchise is the majority of the company’s income.

In July 2009, Gilead announced a collaboration with Tibotec (a division of t Johnson & Johnson) to develop and commercialize a fixed-dose combination (FDC) of Truvada and Tibotec’s TMC278 (rilpivirine). This decision was to develop, in essence, a second generation Atripla.  This was a wise move by Gilead because GSK has its own integrase inhibitor, GSK1349572, which has shown positive Phase II results and will eventually compete with GILD/JNJ’s fixed dose combination. In addition, GILD will lose patent protection on Atripla in 2013, so doctors (or GSK) could combine the new GSK drug with BMS/s Sustiva, thus inceasing the pricing pressure on GILD. Teaming with JnJ should help maintain Gilead’s already dominant FDC market share which is projected to be 40% of the HIV market.    

As a side note, the total market sales of antiretroviral medications in 2009 were estimated at $11.8 billion – and Gilead owned more than 20% of those net sales But new…
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In this Market of Uncertainty – These Could be a Few Little Gems

In this Market of Uncertainty – These Could be a Few Little Gems

Courtesy of Pharmboy

Assorted imitation gems

Here at Phil’s Stock World, we try to offer the best of all possible worlds. Phil has the rounded techniques of using options, covered calls, shorting and overall market direction to a prime. David Ristau gives us one up and one down pick of the day for 2-3% gains (he has been on a roll), and Optrader satisfies the swing trades. And then there is me, Pharmboy. I try to investigate the science behind the scenes to give the best possible chances to our readers on entering stocks we think will be profitable trades.

Take Ariad (ARIA), which I wrote about in August 2009. We had several different approaches, but the favorite was buying the stock at $1.30, selling and equal amount of the February 2010 $2.50 puts and calls which if the stock was $2.50 or above on OPEX, one would have made 68% ( in other words, 100 shares of stock with 1 call and 1 put sold would have gained 68% of the original $1.90).  Where did ARIA finish up on the February OPEX…. $2.54.  Lucky, somewhat on the OPEX play, but ARIA has been one of the core biotech holdings at PSW, along with DCTH (we jumped on this stock at about $5), CRIS (in at $1.21), KERX, and QCOR.  Now, not all are perfect, as we have had a few that have gone south on us, most notably GILD. (Actually, Optrader correctly picked the direction on them a week back and I should have paid more attention to his 5d MA strategy.)

PSW has a great group of traders and investors that are willing to offer advice and point to better option and stock plays for all to benefit.  As Phil notes, the more eyes on the charts and the market gives us the distinct advantage to play the game with them, not against!  

Next, on to a few picks that could have us very happy in the next 6-18 months….

The picks I am outlining today are a bit more risky than past posts, but I believe they have the potential to make it to the game.  They may not be a market leader, or the next Genentech, but I believe they have the right ‘products’ in place if management acts…
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Playing the Gap: Identifying and Trading Gaps

Playing the Gap: Identifying and Trading Gaps

Courtesy of Pharmboy

Gaps are very profitable technical indicators.  A gap is an area on a chart where no trades take place and these are caused by fundamental or technical events that usually occur after the market closes and before the market opens, also known as ‘non-regular trading hours’ (NRTH’s).  There are four basic gap types:  area, continuation, breakaway and exhaustion.

Gaps are significant for many reasons:

  1. Gaps tell traders that something occurred during NRTH’s.  Typical events include: earnings announcements, FDA approvals, analyst upgrades/downgrades, company press releases and other significant events that may cause investors and traders to place orders to buy or sell during NRTH’s, causing an order imbalance.
  2. The type of gap will help you determine the probability of the stock’s direction in the short and intermediate term.
  3. Gaps are profitable.  Traders can take advantage of the imbalance of orders by either “catching the momentum” or “fading the gap”.  When riding a gap, the traders are betting that the stock will continue in the direction it gapped.  When a trader fades a gap, they are betting that the gap will “fill” and move opposite of the gap’s opening direction.

Types of Gaps

Area Gaps

Area gaps are usually small and unimportant.  They are also referred to as “common gaps” because they occur so frequently.  Characteristics of area gaps are that they are fill very quickly. When the word “fill” is used, traders are referring to the gap’s closure.  The gaps usually occur in trading ranges and they form on very low volume.  Because of the low buying volume of the stock, the gap cannot sustain itself, thus filling relatively quickly. 

The easiest way to determine if a gap will fill is to watch the first 30 minutes of the day.  If the candlesticks appear to be fading in the opposite direction, it’s very difficult to stop it.  This is because many others see the same fade and will jump on board.  Remember, a gap does not have to fill on the same day of the gap.  These types of gaps are unpredictable and are hard to trade.  Figure 59 an example of an area gap.

Figure 59.  Area gap.

Continuation Gaps

Continuation gaps are extremely important because they “continue” a trend.  They are also known as “runaway” or “measuring” gaps and they do not fill quickly.  These…
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Basic Technical Patterns: The Foundation of Common Pattern Identification

Pharmboy’s latest chapter in his TA eBook – Chapter 7! - Ilene 

Links for previous chapters:

1. Understanding Market Cycles: The Art of Market Timing (Chp. 1),

2. Dow’s Theory of Markets (Chp. 2),

3 & 4. Fundamental vs. Technical Analysis and Types of Technical Trading (Chps. 3 & 4).

5. Stock Charting Basics: How to Read & Understand Stock Charts (Chp. 5 here.) 

6. Using Moving Averages for Long and Short Trades (Chp. 6)

Basic Technical Patterns: The Foundation of Common Pattern Identification

Courtesy of Pharmboy of Phil’s Stock World 

History tends to repeat itself, and trend lines, triangles, and other patterns do work in TA.  Charts show the collective opinions of all market participants for that day, month, or whatever timeframe that is used.  Charts are direct evidence of the trader’s beliefs and feelings, and each movement reflects a bit of human emotion (or at least it did before speed trading – HAL9000).  So, it should be no surprise that patterns repeat themselves over and over.

In Figure 1 below, typical up trends and down trends are shown.  These zigzag patterns are seen all the time, but why do they form?  Let’s say someone bought a stock at a certain point.  If that stock went up, but pulled back to the original purchase price, they will often think that it’s an opportunity to buy more at their original price, thus adding to their position.  This is also the same for shorts when they are able to short a stock at the same price they shorted previously. Then why do peaks form? People sell (or cover) to take profits.  Obviously, any increase in selling will pull the stock back.  Those who bought at a lower level may start buying again.  This repeats and repeats until 1) there is no more stock left for people to buy, or 2) there is too much supply and not enough buyers.  On a larger scale, this is how bull and bear markets begin and end.

Figure 1  Typical up and down trends.

The following basic chart…
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Fundamental vs. Technical Analysis

Two more installments of Pharmboy’s TA book – chapters 3 and 4.  See chapters 1 and 2, here and here. – Ilene 

Fundamental vs. Technical Analysis

Courtesy of Pharmboy 

There are many different ways to assess the value of a company, and the methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental analysis and technical analysis. Fundamental analysis is a method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the security’s value, including macroeconomic factors (like the overall economy and industry conditions) and company-specific factors (like financial condition and management).[1]  Technical analysis takes a completely different approach. It is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.[2]  

Figure 12.  Technical analysis noted on the graph, Fundamental analysis income statement.

 

Out of the two, fundamental analysis is the more widespread discipline, by far. There is a lot of criticism concerning technical analysis, and the criticisms are derived from the Efficient Market Theory.  The Efficent Market Theory states that the market’s current price is accurate and correct and that past information (same as charts) is already discounted into the stock.  There are variations of this theory; however, most of these people believe that if technical analysis works then market efficiency may be questionable.

There are many papers, in fact, that say TA is often more reliable and profitable using a few finely derived rules.  Ramazan Gençay wrote a paper entitled, “The predictability of security returns with simple technical trading rules.”  Here is the abstract:

Technical traders base their analysis on the premise that the patterns in market prices are assumed to recur in the future, and thus, these patterns can be used for predictive purposes. This paper uses the daily Dow Jones Industrial Average Index from 1897 to 1988 to examine the linear and nonlinear predictability of stock market returns with simple technical trading rules. The nonlinear specification of returns are modeled by single layer feed forward networks.  The results indicate strong evidence of nonlinear predictability in the stock market returns by using the past buys and sell signals of the moving…
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Dow’s Theory of Markets

Here’s the second chapter from Pharmboy’s “Handbook of Technical Analysis.”  If you missed the introduction and first chapter, click on “Understanding Market Cycles: The Art of Market Timing” to read from the beginning. – Ilene

Dow’s Theory of Markets

Courtesy of Pharmboy of Phil’s Stock World

Chalkboard with Einstein's Theory of Relativity

Technical analysis dates back hundreds of years. According to historical records, a great Japanese rice trader named Homma Munehisa (1724-1803) developed a form of TA known as candlestick charting.[1] A candlestick chart is a style of bar-chart used primarily to describe price movements of securities, derivatives, and currencies over time.  It combines aspects of a line-chart and a bar-chart, in that each bar represents the range of price movement over a given time interval. It is most often used in TA of equity and currency price patterns.

Technical analysis is an art. With focus and diligence, TA can often be learned within a short period.  A chartist using TA reads and interprets chart patterns and then attempts to predict the most likely short-term outcome based on his methods. Figure 1 shows a 6 month Diamonds (DIA) candlestick chart and many patterns and studies that traders often use to enhance their trading. Moving averages convergence divergence (MACD) and relative strength index (RSI) are two studies very commonly used by technical analysts.  MACD is a trend-following momentum indicator that shows the relationship between two moving averages of prices, while RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses in trying to decide overbought and oversold conditions of an asset.  Because candlestick charting is the basis of this handbook, I use these types of charts almost exclusively in my examples.

In the U.S., TA first gained a following from Charles Dow’s Dow Theory in the late 19th century. The six basic tenets of Dow Theory, as summarized by Hamilton, Rhea, and Schaefer, are as follows:

Tenant 1.  The market has three movements (Figure 2):

  1. The primary trend, or major trend, may last from less than a year to several years.  It is bullish or bearish.
  2. A secondary trend moves in the opposite direction of the primary trend, or as a correction to the primary trend.  For example, an upward primary trend will


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Pharmboy’s Review

Courtesy of Pharmboy

Good day to all! The corn is ready for harvest, and the fall season is upon our Pharm.  It is time for a quick review to see how we have done, and add a few more goodies to our Plots.

From our 15-Aug-09 list:

Novartis – Buying the $40 Jan10 C @ 6.40 ($1 premium), selling $45 Sept09 for 1.35 (also $1 premium).  The $40s Jan10 are now 9.10, and rolled 2X to the $50 Oct, now at $0.45 (small loss on the roll).  Net ~$2.1 up for the trade.

Bristol-Myers – Buy outright for the dividend, or buying the $20 Jan10 C @ 2.80 ($0.5 premium), selling $22.5 Sept09 C @ $0.55 and $22.5 P@ $0.7.  I think this company has room to run.  Bought outright and the stock closed on OPEX at 22.47…..can’t get better than that……Only stock on this position, but looking to sell the Nov09 24/22 P/C for 0.44/0.75.

SNY – Not as confident on the SNY story as of yet.  I would sell the $32.5 Sept09 P, being prepared to roll down to the $30 Dec09s.  These expired worthless….nice gain.

JNJ Buying the $55 Jan10 C @ 6.50 ($0.5 premium), selling $60s Sept09 C/P for 2.20.  $55 Jan10s currently $6.10, and the Sept P expired worthless.  Sept09 C rolled to the $60 Oct09 C for a 0.50 credit.  Puts not sold as of yet.

Genzyme – Buying the $50 Oct09C @ 4.2 ($1.5 premium), letting it run for the next few days, and then selling $55 Sept09 for 1.25 or better (all premium).  $50 Oct09 are currently $6.80 and the $55 Sept09s were rolled up to the $57.5s almost even.  These will need cashed out for a $2.5 gain, or to be adjusted to the 50 Apr10 C for 9.8.  To help offset the costs, I would sell the $55 Oct09 P for $1 or better.  For a net $1 out of pocket
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ValueWalk

Contrarian Signals (Or Why Romania May Be the World's Best Performing Market This Year)

By Michael McGaughy. Originally published at ValueWalk.

In my research and investing I stress three things: people, structure and value.  I look for companies that are controlled and managed by quality people, have corporate structures that align minority and majority shareholder interests and trade at valuations that are below fair value if not outright cheap.  This post is mostly about valuation and how bankers and financial experts take away the punch bowl just when an investment becomes attractive. Nedd3_89 / Pixabay

I’ve written before how doing the opposite of what the financial institutions are doing and recommend (see here). This post is in the same vein .

T...

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Phil's Favorites

Monthly Macro Video Mish with Gordon Long

Courtesy of Mish.

Roughly every month, but on no particular day or date schedule, I get together with Gordon Long to discuss the global macro picture. This month’s spotlight is on Europe: target2, elections, and Turkey but with a mix of discussion regarding the US and Australia.

Mike “Mish” Shedlock

Original article here.

...

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Zero Hedge

Pepe Escobar: Daesh, Creature Of The West

Courtesy of ZeroHedge. View original post here.

Authored Op-Ed by Pepe Escobar via SputnikNews.com,

James Shea, Deputy Assistant Secretary of Emerging Threats at NATO – now that’s a lovely title – recently gave a talk at a private club in London on the Islamic State/Daesh. Shea, as many will remember, made his name as NATO’s spokesman during the NATO war on Yugoslavia in 1999.

After his talk Shea engaged in a debate with a source I very much treasure. The source later gave me the lowdown. 

According to Sau...



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Members' Corner

More Natterings

Courtesy of The Nattering Naybob

[Click on the titles for the full articles.]

A Quick $20 Trick?

Summary

Discussion, critique and analysis of the potential impacts on equity, bond, commodity, capital and asset markets regarding the following:

  • Last time out, Sinbad The Sailor, QuickLogic.
  • GlobalFoundries, Jha, Smartron and cricket.
  • Quick money, fungible, demographics, QUIK focus.

Last Time Out

Monetary policy is just one form of policy that effects capital,...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Top Story: On health reform, Donald Trump followed Republican leaders into a ditch (Andrew Prokop, Vox)

The cancellation of the planned House vote on the American Health Care Act Friday is a devastating defeat for President Trump, marking the first major legislative setback of his administration.

Yet in some ways, it might also come as a relief to him — because the Republican health bill, crafted mainl...



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Kimble Charting Solutions

Fund flows of this size could mark a top, says Joe Friday

Courtesy of Chris Kimble.

A year ago flows into ETFs were extremely low, actually the lowest in years, as many stock market indices were testing rising support off the 2009 lows. The crowd wasn’t adding money to ETFs as lows were taking place. In hindsight, this was a mistake by the majority. Below I look at ETF flows over the past few years with an inset chart of the S&P 500.

CLICK ON CHART TO ENLARGE

Nearly three months into this year, fund flows have surpassed mone...



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Chart School

Indecision Strikes

Courtesy of Declan.

It was no real surprise to see indices slow down in their recovery. Across the board doji mark a balance between buyers and sellers. The one index which bucked the trend a little was the Russell 2000. It staged a modest recovery which brought it back to former support turned resistance. However, technicals remain firmly bearish, and will stay this way even if there are additional gains.

The S&P closed on light volume with a doji below resistance. The narrow intraday trading range offers a low risk opportunity with a break and ...

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OpTrader

Swing trading portfolio - week of March 20th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Bitcoin Tumbles Below Gold As China Tightens Regulations

Courtesy of Zero Hedge

Having rebounded rapidly from the ETF-decision disappointment, Bitcoin suffered another major setback overnight as Chinese regulators are circulating new guidelines that, if enacted, would require exchanges to verify the identity of clients and adhere to banking regulations.

A New York startup called Chainalysis estimated that roughly $2 billion of bitcoin moved out of China in 2016.

As The Wall Street Journal reports, the move to regulate bitcoin exchanges brings assurance that Chinese authorities will tolerate some level of trading, after months of uncertainty. A draft of the guidelines also indicates th...



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Mapping The Market

Congress begins rolling back Obama's broadband privacy rules

Courtesy of Jean Luc

I am trying to remember who on this board said that people wanted to Trump because they want their freedom back. Well….

Congress begins rolling back Obama's broadband privacy rules

By Daniel Cooper, Endgadget

ISPs will soon be able to sell your most private data without your consent.

As expected, Republicans in Congress have begun the process of rolling back the FCC's broadband privacy rules which prevent excessive surveillance. Arizona Republican Jeff Flake introduced a resolution to scrub the rules, using Congress' powers to invalidate recently-approved federal regulations. Reuters reports that the move has broad support, with 34 other names throwing their weight behind the res...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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Biotech

The Medicines Company: Insider Buying

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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