Biotech stocks continue to be the market's movers and shakers - some bullish, and some bearish. As the wave of news starts to wind down, these stock's charts begin to reflect their true underpinnings. The industry's most noteworthy charts today are those of BioElectronics Corporation (BIEL.PK), Human BioSystems [
prior to the reverse merger with San West, Inc.] (HBSY.OB), Advanced Life Sciences Holdings, Inc. (ADLS.OB), and Angiotech Pharmaceuticals, Inc. (ANPI). Here's a brief glance at each.
It's not that the rally from
BioElectronics Corporation (
BIEL) wasn't deserved. It's just that any move from $0.001 to $0.08 -
almost a 1000% gain - is daunting. BIEL shares are simply overbought. Yet....
The Small Cap Network has been following BioElectronics for a few weeks; the only flaw found was that the company's press releases lacked specifics or concrete evidence of fiscal progress. It's an upstart though, so the future means more than the past or present.
As such, it's not right to assume this overbought stock is due to implode. Rather, this is a case where a trader will want to pick and choose his battles on the way up.... buying on the dips, and selling at the peaks.
Near term (as in immediately) BIEL is contending with the confines of its wedge shape. Further out, there's support around 6 cents where the 38.2% Fibonacci line is resting. The next checkpoint is the 61.8% retracement line at 3.7 cents.
The bulls should enjoy the fact that the pullbacks have been on very modest volume.
For what it's worth, don't forget that
Human BioSystems (
HBSY) is going to process a reverse merger with San West, Inc. soon. Some of the stock's recent action may reflect that impending event, though most of it should be baked in already.... meaning the chart can mostly be taken at face value.
And what value is that? Though volume is alarmingly low -
and always has been - Human BioSystems shares appear to be pushing up and off a somewhat-meaningful support level.
The maximum upside target here would be 50 cents, where HBSY has topped a couple of times this year. However, if the reverse merger occurs before that target is met, then all bets are off, so to speak.
This is strictly a speculation play.----------------------------------------------------------------------
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The momentum for
Advanced Life Sciences Holdings, Inc. (
ADLS) is clearly bearish, but the trading outlook probably couldn't be any more bullish. Yes, this is a reversal play.
As was pointed out in our
July 31st chart review of Advanced Life Sciences Holdings, a non-approval of Restanza (cethromycin) as a community acquired pneumonia (CAP) treatment was in the cards based on ADLS's movement at the time. We suspected the bad news could send the stock back to support around the 15/20 cent area;
today's low was 21 cents. The pullback was almost entirely fueled by the disappointing news.
Bigger picture though, the company still exists; they still have products, and the story on Restanza -
perhaps for other uses - is far from over.
Though there's a load of downside risk, our contrarian senses suggest Advanced Life Sciences Holdings is at or near a bottom, and is ripe to take a lot of traders by surprise with a strong move higher.
That said,
tight stops are an absolute necessity.Today's strong open from
Angiotech Pharmaceuticals, Inc. (
ANPI) was impressive. The move bullishly broke the stock out of a wedge shape. Unfortunately, ANPI has been selling off ever since; it's an alarming knee-jerk profit taking reaction, with some pretty strong volume to boot.
The mental struggle is that the news from this morning actually has positive fiscal implications. The 'CE' mark for Cook Medical's 'Zilver' stent (licensed from Angiotech) isn't a big deal, but the stent's approval for use in Europe is important. Don't look for an overnight windfall, but it's the beginning of a better top line.
That said, trading the stock still appears to be something of an adventure. (continued below)
Before taking any action, it's suggested that traders wait for one side of this triangle or the other to break down. Simultaneously, note there are key Fibonacci lines at $1.88 and $1.21 effectively acting as a frame for the stock's recent action.
If ANPI can just get the right nudge though, the upside potential here is huge; the stock was trading in the high $20's in early 2004, when the company was much less attractive. The last six months have been the best six month stretch we've seen since then. There are some short term hurdles that could trump any recovery effort though. The Fib lines mentioned above are the key.
If you'd like to know of any changes in our opinion of these four stocks (or if we officially recommend them as trades), be sure to sign up for free newsletter today. It's delivered 2 to 3 times per week.
