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Biotech / Medical : Matritech (NASDAQ - NMPS)
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To: Tim Zhu who wrote (74)6/14/1996 1:53:00 PM
From: Patrick Tang   of 849
 
Tim: I do not share your optimistic accessment for the near term prospect of NMPS. Why? The price/volume actions are turning sour (evidence: it made lower lows and penetrated the initial support of $12).

Technicallly, primary or secondary offerings ALWAYS have negative impact to share price short term. The degree of impact normally depends upon the amount of dilutions and the business prospect after the offering. For example, when IDEC Pharm (a better company than NMPS) announced its 1.7 million shares offering in the middle of May, it was trading at $30 plus. The underwriter was Morgan Stanley (a better company than Montgomery). Despite of all these bullish reports endorsing IDPH, it completed its offering at $24 last week. What does this story tell me? The specialists have all the ingredient to bring NMPS down to the $10 primary support level as follows:

1. Deterioting price/volume chart pattern

2. Secondary offering pending

3. Potential competitor in Biomerica's PSA test

4. Potential competitor in Bard's BTA test

The signs are clearly visible. Watch out. As a matter of fact, the aformentioned items 2,3, and 4 underscore the superority of technical analysis. The price/volume actions actually deterioted two weeks PRIOR to the announcements of these negative stuff. Two weeks ago, nobody knew (except the specialists and the insiders of NMPS) why NMPS declined. Now most investors know what's coming. Only the unfolding of the price/volume actions will tell me whether we have come to an important phae 2 bottom.

Best wishes.
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