No Need to Share - Quietly Adding a New Idea

Hey all... good Wednesday to you! We've got very little change in the major indexes today as I type and not a whole lot of economic news out there other than existing home sales were up to a 1-1/2 year high while supply of properties on the market was the lowest in almost seven years, pointing to a continued modest housing recovery. Pretty sleepy. Not much out there driving this market either way and we're seeing the result of that with the way the indexes are tepidly moving. It's days like today where the last hour of trading may provide a clearer picture of things to come with the old cliché that the first hour of trading is for the amateurs and the last hour is for the professionals.

Again, we're continuing to watch very carefully who is leading the charge of late. Of my laundry lists of indexes, so far this morning the VIX and commodities are in control of the top % gainers which doesn't bode well for stocks but a morning does not a trend make. We've also continued to point out over the last few trading days, the DOW and the S&P have been outpacing the NASDAQ which I find more compelling than anything else right now. It is possible that's an early warning sign for a possible pullback in the broader indexes, however, no major technical indicators point to a trend reversal just yet.

Wish I had more for you on the major indexes at this point but that's just the way it goes sometimes. Not every day is a dramatic market movie in the making. All of our current trading ideas are continuing to perform well with no significant changes to report so with that being said, we're going to quietly add a new trading idea to our list that appears to be resonating well with investors of late and biotech continues to be a very hot pocket in the market.

A Storm Brewing for ENMD?

I've patiently kept this one under wraps until now. This idea was brought to us by one of our Members shortly after its initial run-up back in the middle of January. Since I'm not a fan of chasing running stocks, I thought I'd give this idea some time to play out and I think now may be the best time to take a shot with shares of ENMD. The chart looks very good and the recent corporate developments I find extremely interesting as well.

EntreMed (ENMD) is a clinical-stage pharmaceutical company focused on developing ENMD-2076, an Aurora A and angiogenic kinase inhibitor for the treatment of cancer. ENMD-2076 has completed Phase 1 studies in patients with solid tumors and leukemia and is currently in a multi-center Phase 2 study in ovarian cancer as well as a Phase 1 study in multiple myeloma.

The Company currently trades at a market cap of roughly $27M, has no significant debt to speak of and appears to be well enough capitalized to realize their dream which would ultimately be an FDA approval of their ENMD-2076. ENMD has also had a few key developments of late which fits within my "Reading Between the PR Lines for Profit" edition yesterday but let me say in advance that ENMD is one of those biotechs that has hugely disappointed investors in the past. It has a long history of figuring out a way to survive and raise enough capital to keep the dream alive. So, I'm not going to sit here and profess that I know what the cure for cancer will be but what I do know is there are many biotechs over the course of time that heavily rewarded the right investors at the right time and technically speaking, I like ENMD a lot right now.

In late January, ENMD announced the completion of a strategic financing for approximately $9.3 million. The financing was led by IDG-Accel China Growth Fund II L.P. and joined by other accredited investors, including Emerging Technology Partners, LLC, and Dr. Tak W. Mak, Director of the Campbell Family Institute for Breast Cancer Research. Then, earlier this month, the Company shuffled its board around announcing that Wei-Wu He, Ph.D has joined the Board of Directors as Executive Chairman and Tak W. Mak, Ph.D has joined as a member of the Board of Directors as well. Considering their backgrounds, one has to wonder why ENMD? Is it purely a capital play to make money or do they see something significant here?

Dr. Wei-Wu He is currently the CEO and Chairman of OriGene Technologies, Inc. He also is the founder and General Partner of Emerging Technology Partners, LLC (ETP), a life sciences focused venture fund established in Maryland since 2000. Dr. He was also one of the first few employees at Human Genome Sciences, Inc. and from 1993 to 1996 was a scientist at the company.  Prior to that he was a Research Fellow at Massachusetts General Hospital and Mayo Clinic. Dr. He has been involved in founding and funding over 20 biotech companies throughout his career.

Dr. Tak W. Mak is best known as the leading scientist of the group that first cloned the genes of the human T cell antigen receptor. He was recently awarded the Order of Ontario and has won international recognition in the form of the Emil von Behring Prize, the King Faisal Prize for Medicine, the Gairdner Foundation International Award, the Sloan Prize of the General Motors Cancer Foundation, the Novartis Prize in Immunology and the Paul Ehrlich Prize and Ludwig Darmstaedter Prize of Germany. Dr. Mak's held the position of VP of Research at Amgen, Inc. and was Director of the Amgen Institute in Toronto from 1993-2002. Fairly credible bios coming from a medical layman like myself.

The bottom line is the market loved the recent moves by the Company. I've included a daily chart here for your review that suggests shares of ENMD may have finally woken up for good. After flat lining and frustrating investors for the good part of 2011, shares of ENMD popped on the reshuffling, financing and other biotech related news out there in the market place. And, it did it on very compelling volume. It has finally managed to break out of its long-term slump and trade convincingly above its 3X3 DMA (light blue line) and has now found some support at the 25x5 DMA (dark green line).

Although corporate developments are always important, there's nothing like good 'ole fashion momentum and ENMD has that going on right now. After a very fast and furious move up in late January, the stock has retraced a good 5/8 of that move, tested it twice and is now providing us with a pretty attractive risk/reward entry level I can live with... so let's take a shot here on the pullback. Like always, let's not get married to this. Use trailing stops. If we get a run-away train with ENMD, this could prove very rewarding for timely investors.

Now somebody call management and tell them to get cracking... we want another big leg up.