Short-term risk factors as I see them right now:
(all imho of course)
(1) This bear market sentimen't next victim is going to be bio-tech sector, as a bear usually smells every bush before disappearing. They have been taking out one sector after another. Barron's article just started the ball rolling down for bio-tech last weekend.
(2) The IMGN PR dept. may be exhausted for a while, and most likely will be silent until after Thanksgiving now (and possibly until after Christmas). This will give just an excuse to short-term momentum-players, to reverse the train, and they can mount consistent pressure.
(3) The Tech/Internet/Fiber-Optics sectors have been decimated already, and when the general rally starts, optics would be the first one to rise from the ashes, having the muscles to show short term rising earning patterns in the present, solid growth history and demand. Many tech investors have already started salivating and making their short-lists ready to lock and load such issues. The immensely favorable risk/reward ratio now has created a kid-in-the-candy-store like situation there. My best pick in this area right now is NUFO -- extremely delicious PEG ratio there, and feels like having a potential to triple within a year - from 30 to 100 rather easy!
(4) In the totally smashed dot.gone sector, my all-time favorite is the brick-and-mortar backed BNBN - feels an easy 400-500% in 4-5 months there! In the telecom/VOIP sector, check out NSPK, a steal at around 6, when Motorola has paid 33 for its shares in the past! An easy 4-500% from these levels for an initial target. In the streaming tech sector, check out DGLV- Digital lava just waiting to erupt. OMKT looks extremely oversold too.
(5) In hardware/semi sector, ATML, MU and WDC looks like phenomenal buys at these levels.
(6) A potential wireless 10-bagger is SSOL - a must have kinda company at 15.
(7) BMCS will see only rises from this level of 20, for the next year, an easy double or triple safely by next year-end.
(8) So, as the above examples show, a fantastic sale going on right now elsewhere, except biotech. Some of these powerful stocks in the other sectors, are the real glass-half-full (with safe milk and honey) stories out there. So the money is going to be rotated next in those sectors, when things in general stabilize a bit.
(9) Short-term no-personal-DD crowd, may have generated profits by selling elsewhere, they got into IMGN say late by Sept, when the fast rise started, and now, possibly imagining that there may not be that much short term catalyst left to provide the oomph needed for another lift- off, will be quick to neutralize their other gains by taking a loss in IMGN (say from 35 to 25, 40 to 28 etc.), and may hope to join the long-term crowd again, back in 20s, with a theme "no hurry with this one now, its not going anywhere for a while". So, a major portion of such holders will create incessant selling pressure now. Some big, smart and nimble guys (and gals) saw this today - and even with 3.5M+ shares traded, nudged the price down to bring it in the red i.e. old (-aka- smart) holders were most likely net sellers today (with a view to at least take a break for a while from this scenario). The stage-III level and final approval is in the future, so they think a small siesta now won't be non-prudent! Plus, every short-term tech-indicator out there indicating a strong tendency to consolidate. In the aftermath of the sharp-step down Monday, the three-daily lines showing a close on the lower portion of the daily range and descending.
(10) The reward potential may be there, but in the long term, in the short-term however, it has a better potential to give upset-stomach with the wild-rides. :-) The already bruised bear-market delicate holder may not have that much more of a stomach left to go thru this. So, the result may be a net short-term outflow from momentum-holders to very long term players, such as ourselves.
(11) So, until this year's-end, the biotech bear's visit may put this issue in check, and in the upcoming Jan-Feb time-frame, long-term-holders may want to cash out and move on. Neither scenario looks much pleasing for the longs. But that's the way it looks like right now.
(12) When there are no quarterly earnings to look-for as with comp. techs., a bio-tech becomes a hard-hold in the short-term for a momentum player, when the romantic phase of the rise, that on the conceptual promise of future success, meets its first severe price blow, as it happened on Monday. Then 'usually' what happens is that, everyone becomes a bit doubtful of the short-term potential, and many start planning their exit strategies. So, this further extends the consolidation period.
All imho, everyone's mileage varies, as per their analysis and strategies.
regards to all,
-/Sonny. |
