Dexcom Pulls U Turn

I’m a little late with this BLOG posting on DXCM. Today’s action delivered an awesome trading opportunity, and I took advantage of the swoon for my own account. I am hoping others reading this coverage did as well.

DXCM has been trending water of late at about $17- only providing mini pullbacks for accumulators. Today, the company announced year end numbers, and 4th quarter losses were a little higher than expected.

Those who follow this one along with me know the investment has nothing to do with the numbers- it’s all about the company receiving an FDA Approval on its wireless blood glucose monitoring device. Analysts who follow the company believe the FDA Approval will come at around the end of March.

The weaker than expected numbers pushed the stock down in the early trading. However, since it was trading down on very light volume, I knew it would be a good buying opportunity. Here’s the chart I was looking at:

As I watched the stock drop on light volume, I placed a limit order to buy if the stock hit the $16.30 mark- a perfect 61.8% retracement.

I ended up buying within a penny of the low trade of the day- this rarely happens, so I’m feeling pretty good about it.

I figured it might hang in this range or even go lower. However, apparently I am not the only one looking for a 61.8% retracement. The stock only traded below $16.50 for about an hour, then it turned around and headed straight back up. As I write this BLOG, DXCM is actually showing a $.44 gain on the day at $17.38.

Fortunately, I was able to execute a great trade. Unfortunately, I didn’t post this BLOG in time for anyone else who wanted to act and didn’t see the action in the stock.

My position is now 7,000 shares at an average cost of $14.71. Looking to go to 10k shares if the market allows between now and the announcement of an FDA Approval. If they get the approval, I believe the stock will trade at about $25.

There is still plenty of upside, but pullbacks are short lived with this stock. When a stock trades down on light volume like this, and pulls an abrupt U turn- you know it is under accumulation by big money.

It’s still risky- the market is pricing in the FDA Approval, and if it gets denied the stock will probably be cut in half.

However, I am betting they will get it. Comments and questions are welcome.

HESG Correction- Sorry Guys

Many apologies to my pals at Health Sciences Group. Thanks to one of the faithful, I recognize I had a typo in last night’s edition on HESG’s latest contract to sell SHUGR.

With regard to the new contract with LavazzaStore: I stated they “ not start offering SHUGR”- I meant to write that they would “now start offering SHUGR”.

Many apologies to our friends at HESG who are working their butts off to try company rolling.

HDY Swoons- Shareholders Underwhelmed at AGM

HDY had its annual shareholders meeting today, and apparently participants were extremely “underwhelmed”. In fact, so underwhelmed that many of them chose to sell the stock today, creating a nasty down day on pretty high volume.

As they have done so many times in the past, I expected management to pull a rabbit out of the hat on the Guinea side. However, I have heard via third party (anotherwords, I talked to someone who talked to someone who was there) that the AGM was, in his words, pathetic.

As I have heard it, there were no encouraging words about the Guinea drilling permits, a very weak explanation concerning their lack of cash, questionable financing activities, and what appears to be a very weak result out of their Louisianna natural gas properties.

As if to add insult to injury, Q3 numbers were released today, and they of course showed a company with whopping ongoing losses. They appear to be burning about $1 million per quarter in cash, and as of the end of December were down to about 5 weeks of cash. That was 5 weeks ago.

Since I wasn’t there, I can’t confirm everything I am hearing. However, the stock’s behavior supports the version I heard.

This stock is now approaching the suggested $2.20 stop loss level. As I have been suggesting over the past two weeks – the management’s failure to come back from Guinea without the drilling permits would cause investors to lose patience.

If history repeats itself, the stock should now rebound as the faithful in HDY jump into the “bargain”. If you want out, the bounce would be the time to sell. Also, history tells us the company usually delivers an optimistic press release in these situations, which also helps improve the trading levels.

I intend to sell my remaining 10k shares if and when it bounces with an eye towards an opportunity to get back in. I can always get back in when it looks like they are really closing in on the drilling permits.

Comments and questions are welcome.

NWKI Knocks Cover Off the Ball

Last year’s two N’s- the two big disasters, are both rocking on the corporate side this year. The two N’s to which I allude, Network and NeWave, are both gaining momentum. Unfortunately, for shareholders who own these stocks in the $1 to $2 range, it’s too little too late. However, I believe there is plenty of money to be made in both of these stocks from current levels.

On Friday NWKI was out with news before the open, and the stock moved up 22% in response to the event. The company landed a $3 million contract to rebuild the network and rewire the Station Casino in Henderson, NV.

There are many more multi million contracts just like this out there in the market place, and the new management at NWKI appears positioned toget more than their fairshare. When telecom stocks come back, look for a major move in this guy.

Here’s a chart of NWKI in 2006. I circled both the low points. Note- the lows are getting higher. I would also like to see the highs getting higher. As such, a move above the horizontal line at $.65 would be just the ticket.

The key to accumulating this stock is to wait for the next low circle point. If you do that, you have to wait for the next major event to surge back up, which could require some patience. However, that is the best way to accumulate the stock. I anticipate further growth. The new contract should put them somewhere in the $13 million range in annual revenues.

Comments and questions are welcome.

HyperDynamics; Revised Thoughts

I have great news for all you HDY fans who want the stock to rip up the charts. There’s an old adage in the market- as soon as you buy it goes down, and soon as you sell it goes up.

I have decided to take out an insurance policy on my HDY holdings. Until today, I had 20000 shares at an average cost of about $1.75. I started liquidating half today at $3. I think I sold about 8500, and plan to sell the remaining 1500 tomorrow.

The surest way to make a stock go up is to sell it. Therefore, the stock should make some kind of great move in the near term if the unwritten rule remains in force.

Call it a feeling if nothing else- I simply believe the company is still a ways off the signing a new deal with the Guinea Govt. I also believe the longer it takes, the lower the stock will drift down.

In addition, it would appear from the SEC filings that the company is closing in on an effective registration statement from their 2005 financing. Once effective, there could be an excess supply of stock hitting the market. In this case, the fund controlling the shares has a reputation for friendliness to the trading side, so it is unlikely there will be any abrupt disruption. Nevertheless, as steady supply could prevent this stock from moving up as easily as it has in the past.

Here’s today’s chart showing an inverted 61.8% retracement. This chart tells me the stock could easily get back up to about $3.32, and then it will be put up or shut up time. This will either be a stock that stairsteps higher, or a bearish head and shoulders.

Therefore, as an insurance policy against a long delay, I have decided to sell half. It it gets way back down I can always buy it back, and I still have 1/2 if the news comes tomorrow and it runs. Strictly from a luck standpoint, it will probably take off now.

Comments and questions are welcome.

HDY Offers Entry Level For Late Comers

I thought the HDY press release concerning the state of the Guinea process was extremely weak today, and obviously the market thought so as well. The stock traded its biggest volume since this ran began, and the bears out paced the bulls today for a 14.5% decline.

Short of getting the drilling permits, a little pullback like this was probably inevitable. In my view, the press release was very poorly worded. To read it, click here.

Here’s a quote: ” Their desire is that a new agreement be initiated through an open and transparent democratic process. Considering the challenges we have faced in the past, Hyperdynamics agrees with this approach. We would like shareholders to know that although this process is time consuming, it is laying a strong foundation for our long-term relationship. We realize our shareholders are anxiously awaiting news about our drilling program.”

Here’s the situation as I see it. They are trying to get a bunch of beaurocrats in a thirld world country to sign an a new agreement giving them exclusive rights to the concession. It might take a couple of extra weeks. Nevertheless, they are putting their best foot forward. So, why apologize for the length of time it is taking? If people get impatient and want to sell, let them sell.

They are either going to get the rights to drill the first wells or they are not, and who knows where we go from there.

If you don’t own this stock, or feel you don’t own enough, this veiled apology became an excuse for impatient people to sell. Considering the volume, it didn’t really sell off too bad.

Here’s how I see the technical picture. The stock gave back an almost perfect 38.2% retracement today. If you are late to the party, and didn’t invest when I called it a “must own” at $1.70, now is your chance to pick up all little. $3 is a reasonably good entry level.

If $3 fails, the next level to look at is the 61.8% retracement at $2.56. I already own 20,000 shares, but if the stock sees $2.56 before the awarding of the drilling permits has been announced, I would be tempted to add to my position.

At $3 you don’t have nearly the upside you had at $1.75, but there is still room for a trade into the news. $4 to $5 is probably a good target.

If they can’t get their agreement done, and can’t get the drilling permits, we are all doomed to lose a lot of money. If they do get the agreement and the drilling permits, there will be plenty of trading opportunities in this one for perhaps years to come.

My stop loss is in the $2.40 range. The longer it takes to get the deal done, the more likely the stock will grind lower. If you can’t accept that inevitability, sell it and take your profit now.

Comments and questions are welcome.

DexCom Cooperates: 38.2% Retracement

For those who are watching, I stuck my neck out and jumped into another 1k shares of DXCM at $17.60 today. Thanks to a shellacking in the NAS today, the stock has given back some of this week’s gains. Here’s the chart I am looking at:

$17.69 represents the 38.2% retracement. In my view, that’s the best we can hope for the way this stock behaves. However, if it wants to follow a declining market lower, $16.61 would be the next stop for more. Below $16.61 I might sell it on a stop loss.

I picked up another 1,000 shares today at $17.65, bringing the total to 5k shares at $$14.08.

Comments and questions are welcome.

Dermisonics Crushed: Cat Is Out of the Bag

As a few have pointed out, Dermisonics has been trading down of late on an almost daily basis. I have suggested that if the stock was getting past your pain threshold, to simply sell it and move on.

Today, just before the market opened, we learned why the stock has been trading so poorly of late, and it’s about as ugly as it gets.

Dermisonics has been “warned” by NASDAQ competitior Sontra Medical (SONT) that its transdermal insulin delivery systems will infringe on SONT’s patents in this area. The news release does not specify there has been a lawsuit filed- it states “upon commercialization” they would be infringing.

I have no way of gauging whether this news is a death knell for their technology, however, my guess is the news will effect the company in a major negative way from another front.

As I have noted in the past, DMSI needed to raise capital in order to continue its development. This news will certainly hamper the company’s ability to raise cash, and perhaps choke off its resources all together. I know the company was attempting to raise money in a very creative overseas financing which would not have been toxic to shareholders. My guess is that process will now be signficantly derailed.

No two ways about it- this chart is ugly. My advice- sell this one, take your loss, and move on. I have seen many situations like this in the past, and they rarely right themselves in the intermdiate term.

In the short term my guess is the stock could bounce back up a little. Today’s news was published by SONT, and DMSI has not responded yet. DMSI will probably put out news stating SONT’s claims are without merit, and the stock could rebound a little from there. That would be your opportunity to sell.

Hopefully, you are holding one or two of the OTC Journal’s recent wins to offset the pain here. I know most who invested in this company own it between $.80 and $1.00. As I write today’s BLOG, it is trading at pitiful $.36.

When speculating on microcap stocks, sometimes it happens. It’s like cancer. The best thing you can do is cut it out and let the patient heal.

I will now be formally dropping coverage of this company. There are better situations to look at.