WallStArb's blog

2009 has been following a very similar (ok its been identical) pattern to 2003.

All signs point to a deeper correction
The S&P 500 resistance at 1055-1065 was respected and the uptrend line in
place since the July low has been broken. Short-term indicators are approaching
oversold levels, but intermediate indicators remain overbought. More importantly,
our volume models remain negative - the Volume Intensity Model (VIM) continues
to point to more selling than buying. On October 1 the market sold off sharply
generating a 90% down day on higher volume – another sign the market is under
distribution (selling). Breadth is also not supportive with our advance-decline line
diffusion indicator never confirming the recent recovery highs. Risk measures,
such as the EURJPY currency pair, are pointing to further de-risking, and the ratio
of stocks versus bonds now clearly favors bonds.

If you're an experienced biotech investor or a novice - you probrably know and understand MOST biotechs are development stage companies.  This is Wall Street "speak" for they lose money and many of them are in a continual state of scrambling for cash.  When a company has great science but poor cash many times it's an unfortunate "trap" for the investor.  I am publishing some of our firm's research which is an "estimate" of current cash reserves and more importantly - NET CASH, which gives an idea how much the company has after paying off all debt and liabilities.

About 3 weeks ago I happened to be doing some research and noticed a strikign similarity between the crash and rebound in 2003 to whats happeend in 2009 (so far).

2 weeks ago we expected the HIGH of this leg to be set on Thursday/Friday Aug 27/28 and the Botton to be set 3 or 4 trading days after on Weds/Thurs Sept 2/3 --> I expect a slow grind higher and the TOP of this leg to be set in about 2 weeks on Sept 17th - the day before OPTION EXPIRATION. We would expect a move maybe 1% - 2% or so higher then previous highs - possible a little higher as the angle of this rally is steeeper so pullback and breakout should be equally steep.

NOTE: You can download the attached FULL PDF

We upgrade our rating to BUY from HOLD based on our increased conviction for compelling Phase II results for TH-302 in combination with standard chemotherapeutics.