Two weeks ago I penned some optimistic thoughts on Hemispherx BioPharma, Inc. (NYSE:HEB). Specifically, I liked the way the stock had pushed above the 20-day and then the 50-day moving average lines, and then after a slight lull, started to perk up again. Although I specifically said HEB would need to make a close above that day's close of $0.22 to seal the deal, the odds of more upside were clear.
As it turns out, HEB wasn't quite ready to roll at the time. Shares drifted lower over the next week and a half, and though the 20-day and 50-day averages held up as support, there just wasn't much buying interest. That is, there wasn't much buying interest until last week. The renewed perkiness we saw from Hemispherx BioPharma that unfurled beginning early last week has made this small cap biotech worth taking a swing on.
The nearby chart tells the story. While it was a bit on the sloppy side, Hemispherx shares gave us higher highs and higher lows last week, pushing up and off the 20-day moving average line (blue). We can also see the stock's effort to close at or near its highs on Wednesday and Friday... the two biggest bullish days of the week. It's a hint that the undertow is brewing up some serious buying interest.
What gives? The catalyst was the bird flu outbreak in China, though HEB isn't really in a position to make good on that opportunity. The company is still reeling from the FDA's rejection of Ampligen in February. The drug was intended to be a treatment for chronic fatigue syndrome, and though a response was measured in many of the trial's participants, the Food and Drug Administration felt the beneficial responses were too inconsistent to justify an approval. It matters, because though Ampligen wasn't the only thing Hemispherx BioPharma was working on, it was the bulk of it. Its Alferon and Polyadenur drugs could be tweaked as a bird flu solution, but not anytime soon, and many other companies are better positioned to attack the current bird flu outbreak.
Don't misunderstand - HEB shares are brewing up a bullish storm, and that's worth a shot. Just don't get married to it. This is a trade based on hype. Once the market realizes Hemispherx doesn't really have a whole lot to offer now that Ampligen is off the table, the rally should end quickly. What a ride in the meantime though. If we see a close above the recent ceiling at $0.235, that should light the fire in a big way.
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