Technical Analysis - Biotechs of Jan 2014

Several commentaries have indicated that the biotechnology sector has done well in 2013. In the ASX, there are 68 "Lifesciences and Biotechnology" companies and 54 "Equipment and Services" companies in the Healthcare sector. This is a relative small list of companies yet time consuming if we are to analyse individually.

Previously this blog has presented a few metrics to analyse biotech companies including:
- looking at qualifications of management, eg number of PhDs
- the number of products in Stage II or Stage III trials
- the number of quarters the current cash would last until

All these are good metrics, but from experience, biotechs have a tendency to crash on any news of setbacks on clinical trials including delays, even though the technology actually works.

Hence in the quick approach taken here is to just look at the price action of the stocks mainly and forget the fundamentals. In addition to the price, stocks with extremely low volume of trades are ignored. Those with relatively high dollar prices are ignored. The main price must have a good trend over the last month, this is of course very subjective.

So here are the biotech stocks that has been increasing nicely in recent times.


Sector: Healthcare 
Industry: Lifesciences and Biotechnology

SIP - Sigma Pharmaceutical
SUD - Suda Ltd
QRX - QRxPharma Ltd
MYX - Mayne Pharma Group
NDL - Neural Discovery
ADO - Anteo Diagnostics
PBT - Prana Biotech
OBJ - OBJ Ltd
BXN - Bioxyne Ltd
BLT - Biotech Biopharma Ltd

Sector: Healthcare 
Industry: Equipment and Services

ELX - Ellex Medical Laser
FPH - Fisher and Paykel
SDI - SDI Ltd
ANN - Ansell
SHL - Sonic Healthcare
AHZ - Admedus Ltd
DRG - Draig Resources Ltd
UNS - Unilife Corp

Buy Notes to Self Dec 2013

Overall best stocks based on MTI, price < value, growth between 30-50
SHV - Select Harvest
PMC - Platinum Capital
GBT - GBST Holdings

For Bottom Fishing, stocks with good fundamental value, price < value, growth > 20
RRL - Regis Resources
LEI - Leighton Holdings


Update: 21 Dec 2013
SHV - although the highest on the list of good stocks, is facing a bearish divergence when compared to it relative timing. In other words, price action and fundamentals seem positive. But the trend of the price action is suggesting negative sentiment - hence avoid this.

A few stocks to watch for are:
- MNF - MyNetFone
- MFF - Magellan Flagship Fund
- CLX - CTI Logistics

Update: 2 Jan 2014
VRT - IVF provider in Australia floated in mid 2013. Significant rise from $6 to $9 in 4 months but has since stabilised. Interesting fundamentals because of increasing demand for IVF technologies.


Update: 10 Feb 2014
SHV - Select Harvest
GXL - Greencross
IIN  - iiNet

Update: 17 Feb 2014
SHV Select Harvests
MFF Magellan Flagship Financial
OGC Oceana Gold

Update 23 Feb 2014
SHV - Select Harvest
CTX - Caltex
DLS - Drillsearch

Update 24th May 2014
SWL - Seymoure Whyte
AIZ - Air NewZealand
AHG - Amalgamated Holdings
RHL - Ruralco holdings

Ligthning Analysis - Stocks mentioned in Money Mag Nov 2013

A few stocks receiving mentioned in the write up include:
TWE - Treasury Wines
CWP Cedar Woods Properties
CLO  Clough

TWE was notable because although its local Australian business is performing moderately, it seems to show some promise in the overseas markets of the U.S and China. The stock may be out of favour due to recent restructure, and analysts seem not to have included the upside of its overseas operations.


A few technology stocks, some of which have recently floated or are floating are:
XRO - Xero
FLN - Freelancer
OFX - OzForex
ESV - Eserv Global - good pattern
HUB - Hub24
OneVue

Risk Management - Buying Selling Shares - Knowing How Much to Buy

Most of the time the excitement is in choosing stocks to buy, even choosing specific price ranges to make the buy. However, buying is only half of share trading. The other half is of course Selling.

Selling is where most people get it wrong. What is called Risk Management in formal finance literature is tied to both buying and selling. However even those people with a willing sell strategy often get it wrong.

This article outlines one of many techniques of Risk Management all the way through from buying to selling. It is true that a good trade should know when to sell even before it is bought.


1. Starting from a fixed capital, say $10,000; decide that each trade should not lose more than 1%. This lets you lose  100 times before you are totally bankrupt.
So amount of each loss is 1% of $10,000 = $100


2. Determine an entry price $x. There are many ways to determine this buy price and will not be covered here. Suffice to say that let buy price = x


3. Determine the exit price $y. This is done before even buying the stock. Various ways of determining this is by
i) %Loss of Entry, say tolerate about 5% loss of buying price.
ii) Using price patterns in technical analysis, such as ABC pattern, or looking at previous support / resistance levels.


4. THIS IS THE KEY. Calculate number of shares to purchase N.
So N = Loss / (x-y) = 100 / (x-y)

Most people including myself buy a fix number of shares, based on what size of investment we can afford. Eg. Want to spend $1000, and the share price is $50, there choose to buy N = 20 shares. This is the wrong way to do it.


5. Finally after calculating N, the initial investment can be determined. So the initial investment is the units times entry price = N * x

There is nothing to worry about the investment being too big. True, $x can be any value. However, the calculated N has already taken into account the tolerable loss (x - y), so the N would ensure the size of investment is reasonable.


These steps contain the decisions for good risk management. The size of the investment must NOT be a decision - that needs to be calculated.

Ligthning Analysis - Stocks mentioned in Money Mag Oct 2013

From a selection of stocks mentioned in the Money Magazine Oct 2013, a quick table of PE, growth rate and Dividend yield is presented below.

*** Disclaimer: These numbers in the table below are NOT taken from Money Magazine. The author has taken the numbers from his own research. 

Although there is quite a selection of stocks, consider those with growth rate above 10%.

Then look at the price chart for the remaining stocks, with an eye in technical analysis. From all this, it appears that the only worthwhile stocks are: PEA (Pacific Energy) and MFG (Magellan)

CompanyName	Symbol	Price	%Chng	P/E	Grow%	DY	Industry Name
Energy Action Ltd	EAX.AX	3.83	0.00	19.15	18	2.35	Utilities(Utilities)
Pacific Energy LTD	PEA.AX	0.43	1.18	10.75	23	2.33	Utilities(Utilities)
Bigair Grp LTD	BGL.AX	0.86	0.00	21.5	18	1.16	TelecomSvcs(TelecomSvcs)
Image Rsrcs NL	IMA.AX	0.12	4.35	-2	-6	0	Materials (Dvrsfd Metals/Mng)
Medusa Mining	MML.AX	2.17	3.33	5.56	10	0.92	Materials (Gold)
Northern Star Rsrcs	NST.AX	0.91	0.55	13	9	4.4	Materials (Gold)
TFS Corp LTD	TFC.AX	0.78	-1.27	9.75	11	0	Materials (Ppr/Forest Prdcts)
Quickstep Holdings Ltd	QHL.AX	0.255	4.08	-5.1	16	0	Industrials (CapitalGoods)
RCR Tomlinson LTD	RCR.AX	3.8	-0.78	11.52	19	1.32	Industrials (CapitalGoods)
Swick Mining	SWK.AX	0.345	1.47	8.63	5	2.9	Industrials (CapitalGoods)
Seymour Whyte Ltd	SWL.AX	1.355	-2.87	12.32	-6	5.9	Industrials (CapitalGoods)
Watpac LTD	WTP.AX	0.975	0.52	12.19	0	2.05	Industrials (CapitalGoods)
Viralytics	VLA.AX	0.35	0.00	-5.83	9	0	HealthCare(Pharma,Biot&LfeSci)
Magellan Financial	MFG.AX	11.37	-0.35	26.44	46	1.93	Financials(Diversified)
ARB Corp	ARP.AX	11.4	-0.09	18.39	9	2.46	Consumer Discr(Retailing)
Breville Group Ltd	BRG.AX	8.17	0.25	21.5	7	3.18	Consumer Discr(Retailing)
Twenty-First Century Fox Inc	FOX.AX	36.33	1.48	9.51	24	0.5	Consumer Discr(Media)
Maxitrans Inds LTD	MXI.AX	1.195	2.14	9.96	29	7.53	Consumer Discr(Autos&Compnnts)
Reject Shop	TRS.AX	17.91	0.39	20.12	3	2.07	Consumer Discr(Retailing)

Buy Sell Notes to Self 26 Oct 2013

These notes are for private consumption and interests only. This is not financial advice.

Using a combination of fundamental and technical analysis and proprietary software, below is a list of stocks and recommendation. These are for the current market at 26 Oct 2013 in the Australian Stock Exchange. As with current financial environment, this view is for short term only, since many factors can influence the stocks.

Wait till it retrace then head back up and buy

GBT, MRN, 

Buy, but ready to sell if drops soon

RCR, TBR, EBT, CFG, BCI, BOQ, LCM, MNF, BYI, AIZ

All stocks are selected because of very good predicted growth, good value, relatively safe.

A few simple statistics are:

CompanyName	Symbol	Price	Change	DY	%Change	P/E	Growth%	SectorName
Air New Zealand	AIZ.AX	1.49	0.065	3.36	4.56	7.84	22.00	Industrials
BankOfQueensland LTD	BOQ.AX	11.93	0.12	4.86	1.02	14.20	17.00	Financials
BC Iron Limited	BCI.AX	4.95	0.08	7.07	1.64	5.50	25.00	Materials
Beyond Int'l Grp	BYI.AX	2.02	-0.05	3.47	-2.42	10.63	22.00	Consumer Discretionary
Challenger Limited	CGF.AX	5.87	0.04	3.41	0.69	9.17	20.00	Financials
Ebet LTD	EBT.AX	3.21	-0.09	0	-2.73	13.96	32.00	Consumer Discretionary
Logicamms Ltd	LCM.AX	1.96	-0.02	4.59	-1.01	9.33	29.00	Industrials
MacQuarie Radio Ntwk	MRN.AX	1.45	-0.05	6.9	-3.33	12.08	33.00	Consumer Discretionary
RCR Tomlinson LTD	RCR.AX	3.8	-0.03	1.32	-0.78	11.52	19.00	Industrials
Tribune Resources Ltd	TBR.AX	2.71	0.01	0	0.37	5.53	41.00	Materials

CompanyName	Symbol	Price	Change	DY	%Change	P/E	Growth%	SectorName
GBST Hldgs LTD	GBT.AX	3.42	-0.07	2.05	-2.01	18.00	37.00	Information Technology
My Net Fone Ltd	MNF.AX	1.5	0.03	2.67	2.04	16.67	29.00	Telecommunication Svcs

Free W.D.Gann Book on Amazon Kindle

Just found this book today on the Amazon Kindle store that it is $0.00

The Trading Methodologies of W.D. Gann: A Guide to Building Your Technical Analysis Toolbox 
by Hima Reddy

Publication Date: September 21, 2012
Book Description
"W.D. Gann’s works helped to pioneer the discipline of technical analysis, and they still offer immense potential value to investors and traders. However, Gann’s original publications are esoteric and can be challenging to read and use. In this book, long-time trader and expert technical analyst Hima Reddy brings these works to life for modern traders and investors. She distills Gann’s tenets into crystal-clear, bite-size explanations, and illuminates them with exceptionally intuitive charts and illustrations. Drawing on extensive personal experience, Reddy explains how Gann’s insights into price, pattern and time can be applied in all types of markets and market conditions. Using this book, any experienced trader can discover the value of Gann’s approach, and start utilizing it in his or her own trades. Then, with Reddy’s discussion as a foundation, traders and investors can delve even more deeply into all of Gann’s works, identifying even greater opportunities for profit."

The link is:
http://www.amazon.com/exec/obidos/ASIN/B009EC01KO/ozba0e-20

Alternatively just go to Amazon and search the title.