Jenna et al,
GMST looks terrific, but makes me nervous because its so great. Will it have another big up-side move, or will it correct? Any feelings?
As a pharmaceutical scientist, I've always been interested in pharmaceutical stocks. I worked for one of the companies you cited, and consult for some of the others now.
IMCL has a fantastic chart history and present pattern. In the recent past, it had a combination cup and handle which was also an ascending triangle. It acted as the chart suggested. Presently, it appears to be forming a nicely falling flag (on low volume - great sign) or a pennant (even better - pennants are my favorite pattern). As you indicated, it had great success in testing an antibody for cancer. This was a phase III study, which is the final phase study before an application. Another phase III study will or has begun. I like the chart pattern, since it has an easy to detect sell stop. Either the flag falls > 33% down the flag-pole or the pennant breaks downward out of its shell (Boxenbaum method <g>). IMCL, is still burning cash. "Many a slip between cup and lip" (trite but true). I expect about 80% of pharmaceutical biotech stocks to bite the dust. The weeding out has already begun. In some cases, buy-outs of pharmaceutical biotechs are bargain sales - buyers take the libraries of drug candidates and gut the staff. The so-called planned (failed) merger of AHP with Montsano was a de facto purchase of Montsano by AMP to obtain the Montsano agricultural business. Had this merger gone through, I would have expected many Montsano employees to have been given 6 month termination packages. BTW, is CREE or another company going to be the next Intel?
When Clinton took office and tried to implement what we used to call "socialized medicine" in the 1960s, pharmaceutical stocks fell. When government controls prices, prices fall. When it became apparent the Clinton plan would fail, the stocks rallied significantly. Now there is talk of Rx drug coverage by Medicare, which would reduce pharmaceutical drug sale margins. Canada has a quasi system of price controls, and profits are a lot less than in the US.
In any event, are we due for a broad-based correction? If you look at the chart for CREE, the up-slope in very steep. It can't go on much longer, can it? Harold. |
