Thank you tumblr for the quick and dirty posts.  All future blog posts will be posted on http://www.johnwelshtrades.com.

Welsh

Assuming the panel on 9/16 rejects them as I believe, what is ARNA fail value:  2.50.  ARNA has the best chance to get an FDA panel nod I believe that, but the likely scenerio is ARNA will also fail & so will OREX, joining VVUS, as failures.  On to ARNA:

ARNA drug is so safe, it has no efficency.

ARNA drug is so efficent, they got a whopping $50 million upfront from their partner. ARNA current market cap is 800 million. The valuation of ARNA is an absolute joke. It will take approval PLUS blockbuster sales to be fairly valued here at 7. Scary thing is, ARNA may not get approved by the panel like every ARNA YHOO board long believes because the drug works just like a placebo. Check out BLOSSOM & BLOOM results….How close does the late stage trials meet the 5% weight loss to placebo recommendation by FDA….let me tell you how close, IT DOESN’T.

So many pumpers out on this stock it makes me sick. ARNA is going to be shorted into the ground at these levels and when the ARNA longs get stiffed armed by the panel on 9/16 they will be left with 50 million bucks, a stock that will be cut in 2/3 with a butchers knife, a broken heart and broken dreams.

Welsh

Just wanted to post a quick blog note regarding twitter & stocktwits and the like, I will be done posting tweets & trades until at least August 30th.  Most of August I will be on vacation, & to be honest, it’s dead on nearly impossible for real time trade alerts, entires & commentary, & way overdue for a nice break.

Even though I have at least a high school degree, since I started twitter over almost a year ago, up over $500,000 bucks/160%+ with EVERY trade entry posted with a trade exit.  Not all were winners.  In fact, some could say I am the biggest loser on twitter.  Transparency would show that 90% of the traders are losers, but that’s a dream that will probably never happen as time has proven so far.

Follow the trading system, of trading rules, money management, trade tracking and the other techniques all for free:  http://bit.ly/7qfO0h  I put these techniques to use everyday.

I have not earned not a dime off the twitter and the content.  I post not because I am loaded, I assure you many paid stocks sites have more money than me, but because I enjoy it & believe whats right.  I am almost 100% certain I will be back. 

Only positions I have on are TIVO & CHTP, and if I sell them will tweet the exit, but plan on holding them over the summer.  Good luck, have a great summer and good luck trading!

JW

I don’t normally write about trades that don’t make or lose money, but I felt that a large trade of FAS today deserved a special blog post.

I came into the day wanting to risk some hard earned monthly profits.  At the beginning of the week, Barney “FRE or FNM forever” Franks said FinReg resolution would be completed by end of day thursday.  I told myself based on market weakness during the week, that if FAS were to open down on thursday, I wanted to go large into this decision thinking that any resolution would be positive for the financial sector.  This remains to be seen.  So at the start of the day I opened up a starter long position in the name on a gap down.

Throughout the morning, the market remained weak, so I continued to scale into FAS, for a full “all in” account position at 21.70, with a stop at 20.99, risking a almost 4k of capital.  Even though the market conditions were telling me this was a stupid play, nothing was signaling buy to me except information I had earlier in the week.  These type of A + B = C trades can equal big dollars but most are losers.  Keep in mind, I earned the right to play FAS big here because I was risking small portion of profits earned during the month.

In the afternoon the rally started to come, and I was up a few thousand on my long position after being down most of the day.  I was going for the home run, hoping the market would turn and this would be a big trade and call.  However, at this point I moved my stop up to entry for a breakeven trade, even though I did not want to do this believing strongly in my position.

Turns out, FAS did not break it’s opening days high and melted down from there.  I HONORED my entry stop, stopped out flat, and felt deflated, on such a bold idea gone nowhere.  I even considered buying more on the pullback, but this late in the day I listened to the market action and the market fell apart into the close.  Swallowing my pride and HONORING stops saved me a few thousand.

Sure, I played this like shit.  Sure, others made money on the play.  Sure, I can second guess this trade until the cow come home.  However, even though this trade made me nothing, the technique applied and thought process above saved me money, and it’s this thought process of HONORING stops that I believe is the lesson learned today.

Now only if I lived in the twitter world, where I can say I got in at 21.10 and sold at 22.28 for a huge gain.  That would be sweet, but that would be bullshit in almost every case.  Learn from the above thought process, not some fantasy land.

JW

CLDX It’s time to start accumulating again on dips like Thursday.  Emailed CFO Chip Catlin regarding rumor that $PFE was going to discontinue it’s CDX-110 trial due to difficulty of setting up the phase 3 study.  This is absurd.  The design of the phase 3 trail maybe hard, but in my opinion, it’s only because the drug works well and whoever takes the trial won’t want to risk going on the placebo.  As Chip Catlin points out, PFE has invested significant money already into the program and is currently working on the phase 3 setup design.

Also, regarding the shelf filed, CLDX says there is no rush to use the shelf and would do so at an appropriate share price.  I believe this due to it’s cash position.  This also tells me this is an unexpected reaction from ASCO results and like DCTH, management must have expected the price to go higher because the overall results from ASCO were good.

CLDX was a big trade for most that rode it up, but I also know many that bought in the 4s and rode it for the complete round trip.  This happens all time time in biotech for companies that don’t have drugs in phase 3 trials, and the selloff on ASCO was predicted many time because that is what usually happens on ASCO.

However, believe it or not, fundamental investors have already started to pick up CLDX for the run into next ASCO.

Disclosure:  At the time of writing this, did not start buying but will next week with starter positions and looking to scale into a larger position.

Welsh

For those that follow me, I am a skeptical trader and investor.  I have learned over the years of trading never, ever trust the market.   So when the market screams in March & April, I was underinvested.  When the market crashes like May 6th, I am protected.   Going forward, don’t care what the market does up or down, never have, never will, but I wanted to throw out a theory of what I believed may helped create the market crash on May 6th:  Internet social networking.

I have been using twitter and Stocktwits for over one year, and what I have found is an incredible tool for real time trading information, absolutely no doubt, it’s a must used tool in any trader or investors box.  However, I have also Stocktwits to be a tool for misinformation and miscommunication as well.  This is what happens in real time markets, the action is quick, usually fast.  However, March & April was a strange time.  The VIX, which measures volatility, was unusually low, which means almost any and every stock pick that was picked on the long side went up.  It was almost like investing in the market was safer than a CD at a bank, and certainty with these interest rates, more profitable it seemed.

For an end user of Stocktwits for over a year, what is noticeable about the tool is when a stock is moving, it’s all over the real time stream.  For large caps, the information is usually spot on correct.  However for small caps, it’s usually motion creates emotion & creates a chart pattern.  Here are a few examples of this that I have seen on the stream, and then I will connect this back to May 6th action:

JOEZ - Stock is one of Stocktwits hottest mentioned stocks on its way to earnings, setting new 52 week highs based on chart patterns and positive stream sentiment.  JOEZ releases earnings, beats numbers, but now is crushed almost 50% off it’s highs.  JOEZ no longer a talked about hot stock on the stream.

FTBK - A now halted bank stock, ran up almost 200% in one day, on no news at all.  I tweeted out that the FDIC would take this over and this bank was hurting on the run after not being able to locate short shares.  FTBK no longer a talked about hot stock on the stream.

GMCR - Granted, a huge success and a huge mover in two years, but on the move to 100 the Momentum boys were all over this thing due to the chart and constant Stocktwits mentions keeping the name in the news.  When earnings came in slightly inline, stock crashes 30% and is not longer a hot stock talked about on the stream.

I have other examples like this as well both bad & good, but here comes the connection back to May 6th and a theory.  I think it’s entirely possible that due to the march & April runs, inexperienced retail investors and traders became way to comfortable with stocks and risk.  Most new investors this year only know the charts of a company without knowing anything fundamental regarding them.  This is what a low VIX creates, & I think most people were fully invested in the market. 

So on May 6th, when the DOW was down 250 points and CNBC was showing the riots in Greece (What a piece of crap network this is by the way), a perfect storm took over.  The retail trader who rode the charts in march & April without knowing any fundamental information about their stock panicked when the S&P 500 broke its support level of 1120 and flooded the market with market orders.  This lead to the FIRST step in the decline that then made the hedge funds puke along with retail, then the QUANTS and ALGOs go berserk for a few hundred quick DOW points.  Where the retail market orders filled who knows, they got screwed, until the QUANTS and ALGOs took back over and corrected the market.

So, what am I saying here, that JOEZ crashed the stock market on May 6th?   No, absolutely not.  What I am saying is you can apply the JOEZ example to hundreds of stocks out there that were overbought on the chart without fear, & when the emotions shift quickly and someone does not know what they are holding they just dump it.

Again, this is just my theory.  Everyone wants to blame a fat finger, the market makers, wall street is crooked, etc.  When I was watching it live that is what I thought too.  Maybe this ends up proven to be, we will see in time.

Going forward, this is a welcome correction, and believe it or not is HEALTHY.   Just keep in mind KNOW WHAT YOU OWN, because when it drops off the hot stock list, you will be abandoned and without a life raft as May 6th suggests.

JW

Here is a quick and dirty ASCO blog on the companies presenting new or detailed data.  The dates of the conference are June 4th - 8th, with most of the data occurring over that weekend.  CLDX CDX-110 already partnered results will shine and the most important detailed presentation of top line data already out looks to be DCTH.

Previews, or abstracts, will be released May 20th most companies, so watch for movement on this date.

What usually happens with ASCO events in past is stocks run up into the event and sell off on news.  That looks to be the case again even more this year.  

 Here are the companies, it’s not a complete list, but the ones I am following:

ARIA - ASCO not a big moving event for them as the reworked agreement with MRK about ridaforolimus on 5/5 a biggie.  They have three phase 1 trial data at ASCO, so all pretty much early stuff.  Don’t expect much noise from this company at ASCO, and to me they look fully valued.

ARQL - Detailed results from ARQ197 phase 2 trial.  The top line results of this trial spike ARQL over 100% because investors/traders hope that this trial with Tarceva may carry over to combinations of other cancer therapeutics such as Nexavar/liver cancer which is contributing to the ARQL excitement.  The detail better match the top line however.  Has an option shelf filed.  Company has big long term potential especially if they hint at other uses at the conference.  This company is starting to make me a believer but need to see more.

CLDX - Already had a huge run into ASCO as I type.  Pfizer will be presenting CDX-110 results for brain cancer which should be outstanding based on Pfizer ramping up hiring & test kits for this trial, and let’s face it, Pfizer needs to show their shareholders something good.  CDX-011 for breast cancer additional data may be presented, but for sure the final data for melanoma will be.  This drug is not partnered as of yet and will tell if the CRGN merger was for the cash or not.  Still phase 2 so early to say final judgment on the merger.  CDX-1307 bladder cancer phase 1 and detail will also be presented.  In 2009 CLDX shot up almost 100% on it’s CDX-110 data but sold off rest of year.  Has an open shelf filed.  Knowing CLDX like I do, would not be surprised to see them use some of the shelf before ASCO sorry to say.

CYCC - Investor relations impossible to get ahold of, but their big event may actually occur before ASCO.  CYCC waiting for it’s SPA, or FDA response for it’s AML drug sapacitabine.  This is a tricky one to play because news could come at anytime.  It’s response is needed to move from  phase 2 to to phase 3.  As far as ASCO, CYCC is presenting probably more detail of sapacitabine.  Has a history of selling off on any news but for this one the SPA event is bigger than ASCO I believe. If the SPA comes out favorable for CYCC before ASCO could be momentum stock into it but will sell off on news for sure.  Speculators love to hype this company up but in my opinion it’s all about the FDA response more then what is going on with ASCO.

DCTH - Already up huge this year, will be a top watched stock at ASCO.  The top line data phase 3 data for metastases from  liver melanoma got Jim Cramer so excited he  recommended speculators the stock.  At ASCO the detail of the phase 3 data will be presented of the trial including survival trends.  Wedbush recently raised it’s target on the stock to $21.  Has an open shelf sitting out there to use.  I have always been on the fence on DCTH, but management better deliver to match their own hype and investors expectations on the detail. 

EXEL - Data from a phase 2 study of XL184 in patients with progressive glioblastoma.  It will be interesting to see these results compared to CLDX-110.  It’s not an apples to apples comparison to CLDX, but if survival rate in this large population is greater than 4 months this company could sneak up and surprise at ASCO.  XL184 data has been presented before but now will be in much larger size.

GNBT - AE37 phase II data will be presented at ASCO, an immunotherapeutic vaccine, for breast cancer.  GNBT has like a perpetual shelf of stock offering outstanding, and even though stock price says it’s a small company, it’ s not, the outstanding shares are huge.  Oink. 

KERX - Stock has had a big move already and looks fully valued to me but I digress.  KERX has the a hot science that everyone is now trying to compare to DNDN.  I don’t fully buy it myself, but they are presenting a phase 2 result of colorectal cancer.  They already have one that is ‘fast tracked’ in phase 3 with AEZS.  In my opinion, this company probably will raise money soon.  I am not a fan of KERX.

MYRX - At ASCO, will report ongoing Phase 2a trials of Azixa(MPC-6827), in metastatic melanoma and recurrent glioblastoma (“GBM”), and Phase 1 clinical trial results for MPC-3100.  Nothing too exciting expect from this company at ASCO with these early trials, but it’s on my watch list.

NKTR - NKTR-102 supporting data for phase 2 results ovarian cancer.  More detail on results already out.  Also interesting is preliminary phase 1 data on NKTR-105 called Docetaxel.  It’s only phase 1 so maybe not much excitement here but will be interesting to see the preliminary data. 

OGXI - From OGXI investor relations:  Phase 1 solid tumor trial for OGX-427 is being presented at ASCO.  The trial includes evaluation as a monotherapy as well as 
in combination with chemotherapy. At last years ASCO, the monotherapy 
data was presented (however I don’t think the market really saw the 
data because our randomized phase 2 in prostate cancer with our lead 
product was also presented). The combination with chemotherapy will 
include new data. —Note, Rodman & Renshaw loves this company but for this years ASCO OXGI nothing too groundbreaking with only Phase 1 data….. - To me, OGXI looks like dead money for awhile.

OXGN - presenting further analysis of phase 2 FALCON study (Fosbretabulin in Advanced Lung Oncology)  Results of this study at ASCO is to support previous data already released.   Roth recently put a $4 target out on name before it’s dilution.  Has open shelf outstanding, trial overall is small and always sells off on news.

PCYC - Already up huge this year (See the theme for most of these biotechs?), will present more data on non-Hodgkin’s lymphoma PCI-32765 program.  If data is supporting, Roth has a note out saying this company is a potential takeout candidate.  Analyst love this company which tells me to be short heavy on weakness if there is any on a trade. 

SNSS - Two important data points will be out.  Phase 2 study of Voleloxin for ovarian cancer, and the study I will be watching detailed data on AML.  Data from AML already reported but this will be the first time complete results will be released.  This is not a small cap company any longer, been diluted to hell but is in the speculators wheelhouse for this conference even though it’s a phase 2 trial.

SPPI - Pre-clinical data from belinostat will be at ASCO, also some additional Zevalin detail.  Not expecting SPPI to be a star at ASCO, but wanting to mention because in my opinino I like this company and it’s management.  SPPI raised money at higher prices and has a decent pipeline with an approved drug.  Zevalin sales are off to a slow start though.  Maybe 2011 SPPI can come around and shine but this management team appears smart to me.  ASCO play this year, not so much.

THLD - Updated top line results from ongoing TH-302 clinical trials at ASCO, which they currently have three.  The “401 trial” is a trial of TH-302 as monotherapy in patients with advanced solid tumors. The “402 trial” is a three arm trial of TH-302 in combination with gemcitabine or docetaxel or pemetrexed in patients with advanced solid tumors. The “403 trial” is a trial of TH-302 in combination with doxorubicin in patients with advanced soft tissue sarcoma.  Not sure if they are updating all three, but this stock is a small cap special and is a thin trader.  They don’t have a ton of cash, and because they are so small they may not make a blip on the radar but it’s on my list.  Spoke to IR, and they will update all trials, but only 403 has been accepted as a poster presentation and abstract.

YMI - Recently raised some money so dilution seems to be out of the way for now.  Presenting nimotuzumab in pilot study for chemoradiation in patients with locally advanced squamous cell carcinoma of head and neck, & 4 year survival results from a phase 2b study.  Recent large insider purchase has put this one on my screen.  YMI has alot of clinical trials going on so hard to tell what if anything is new here.

ZIOP - a big mover so far this year, phase 2 trial PICASSO for Sarcoma (Palifosfamide).  JMP Securities who has a decent track record this year on some biotech calls, on 5/3 just raised it’s year price target to 10 solely on Palifosfamide expects PICASSO to start a phase 3 trial meaning these results should support PICASSO phase 3 trial design.

Speculators Bonus:

Lupus Conference June 24 - June 27 - IMMU doing an oral presentation of their lupus results which looks to be new data at the time I wrote the blog.  Update on IMMU:  5/10/2010 says to report more lupus data at EULAR conference June 16-19.

At the time of posting the blog, no positions in any companies long or short but will be trading them in and out over this time period.

Got alot of requests for this so I will put it up, because the trade was complex but here was the idea of the trade:

I am not a fan of RNN.  I didn’t like it before this big run, didn’t like it when it was running, and of course still don’t like it now.  So, on friday when RNN ran to 2.60 and I could not get any short shares and suddenly some became available from one of my brokers (Who shall remain nameless because the commission rates are so high and will only name them again if they lower down commission costs not only for me but my followers as well) I jumped at it, believing full well three things:

RNN was going to present Serdaxin 2a results, unpartnered of course.

RNN around 7 million bucks in cash.

I was probably not going to get many short shares of RNN again.

So even though I thought there was a good chance of RNN going higher short term, I jumped at the short in hopes the stock went down friday.  It closed near the high of the day, so, AH boxed in 5k shares at 2.70ish to hold the short on ANOTHER broker LONG, tdameritrade, a brokerage firm with fair commission rates.

On monday was not around for the open ironically, but I got fully boxed on the name at 3.20.  So now holding 10k shares long in ameritrade around 3 and still the 10k shares short at 2.58, knowing full well that this could go higher.

So what I started to do was “working the long side of the box” at ameritrade.  By selling the 10k long shares on the rips and buying back lower, on serveral occasions to bring my box cost down, but never touching the short shares, because once covered, I would never get them back.

Sure enough, RNN closed near high of day on monday after some ‘goldman’ upgrade but did not matter to me because I was fully boxed.

Then today, I released the long side of the box again ironically above the 52 week high 3.7x and said I would be boxed again on the open around 3.45.  I checked again for short shares as I wanted to go as high as 20k but could only collect 2.5k more first thing in the morning.  Was right about knowing the time to short there would be no short shares available.

I remained boxed until the data came out in case I was wrong.  I released the box when I saw there was no partner, and a quick scan of the results told me data was just ok.  The box was released around $3.05.

I ended up leaving money on the table when covering half at 2.52ish and other half 2.36ish.  I covered because was up over 10k in total on the trade of working the box and cover, but also read the last line in press release that RNN ‘says’ still talking to partners.  RNN closed at 1.75 so there was much more in the trade but I always follow the motto cannot go hungry taking a profit.

Bottom line:  I felt there was a good chance RNN could run in this market so had to use 2 brokerage firms to do this trade.  I do not believe in technicals and price action in biotech.  I follow what I think I know and try to factor in the market sentiment which is frothy which forced me to do the box.

As far as RNN, it’s an avoid in my opinion. :P

Welsh

I spent the day reviewing my March trades and the general action.  Low float mania has struck and is leading to bad habits.  Here is what I have seen, and some of this I am just as guilty of myself.   I cannot tell you how many emails I have gotten over the last two weeks about a tale of woe with the low floaters.  Here are some bad habits that need to be cleaned up in order to trade successfully again, the top five:

-  Stop trading too MUCH.  Trying to catch low floaters long or short can and will lead to overtrading.

-  If you can, don’t forget to move stop to entry when a stock goes your way.  A flat trade is better than turning a winner trade into a loser. 

-  Keep in mind position size in terms to float.

-  Stop buying every single news item because low floaters are moving.

-  Remember to buy on days low or short at days high for best entries.

All losses must be shrugged off if rules are followed.  It’s the sloppy trading that must get called out.  The slop must be cleaned up in order to succeed.

Have a great weekend - !

Welsh

Lesson:  If feels good to be wrong and make money

Personally, I am having my ‘worst’ trading month since March 2009 of last year.  I bring this up to share what I have learned, even just in one year.

Last week the trading started to get a bit better, with more trading opportunities, but for the majority of this month, the buy and hold, swing type strategy working well much better than the daytrading.  Overall, it’s been a frustrating month with the market basically going up every single day.  Buy and hold won this month.  That being said, I want to share with you the adaptive strategy I applied this month that helped me to make money that is not normally my style.

My style is trying to short overbought stocks in extended markets most of the time.  & this strategy always does well, overtime.   Short term there can be blips, especially when the market stays extended over a period of time like March…or some would say “melt up” to a more fair value.

In March 2009 I had a losing month, dropped about 45k sticking with trading SKF, SRS, and FAZ for a month too long.  During March, I did not adapt, figured these ETFs delivered me 500%+ returns (especially SKF) in the year prior they would always work.  So at the end of the month I reviewed the market and said if the DOW hit 7500 and stayed there I would be done with these EFTs.  It did, I flipped to more long trading and made another 200% last year.   Ok, here is the connection to this month:

In March 2010, I noticed there were not many opportunities with my bear minded view.  I just got ran over losing 7k in a low float stock called SCOK, even though it had a secondary at $6 to go off, it ran 20+ points in two days after I shorted it.  This told me two things:  One, speculation is in play, and two, when shorting, be carefull.

So this month I have shorted SOMX & ABIO, two low float speculative plays, with extra care and in not normal size due to market conditions.   These two stocks broke out massive, but losses were minimal, 2k+, with stops obeyed.  So sticking to my adaption rule this month, I love to short, but going to short carefully when doing so, and that has saved me money.

In turn, my last 4 nice size winners all LONG PENNY STOCKS.  Yep, the same PENNY PIGGIES I would like to short, or hate.  WAVE, YRCW, APCVZ & SNSS combined penny plays in the last week has netted 11k in gains, outweighing the losers.  My point here again is adaption, or switching gears a bit to make money in a market I should have lost in.

Conclusion:  Past experiences has lead me to another profitable month.  Am I happy that I missed this EASY buy, hold and walk away move this month with not much volatility?  You bet.  Adaption makes me a succesfull trader, no matter what the market conditions are.  Most bears and short traders are screaming in losses this month, but not me, I learned from last March right around this time and applied it.

JW