Will Biotech Heat Up the Penny Stock World?

Biotech Stocks To Buy?


sanofi aventis Will Biotech Heat Up the Penny Stock World?Sanofi-Aventis (NYSE-SNY) now has approval from the board of directors to offer as much as $70 per share for Genzyme (NASDAQ:GENZ).  This equals roughly $18.7 billion for the transaction. Last week we mentioned that the Biotech ETF (NYSE:BBH) was a more conservative way to take advantage of the GENZ takeover rumor.

History tells us that a high profile takeover of a company like GENZ usually spurs interest within the particular sector. This interest also can trickle down from the NYSE to the OTCBB as speculative money is getting freed up with the turn in the markets.

Volatile and super liquid bio-pharma stocks like Rexhan Pharmaceuticals (AMEX:RNN) and Neostem, Inc. (AMEX:NBS) may see increased activity as well. It has been proven that “most” start up biotech stocks don’t work in the long term. Most investors know that if they want a core biotech holding for their portfolio, they will look at companies like Amgen (NASDAQ:AMGN) or they can simply buy a biotech ETF or a sector mutual fund.  Most penny stock and small cap investors are looking for a speculative “home run”.

The potential takeover frenzy in the biotech space may or may not materialize. This is why penny stock investors and traders need to be nimble. In the next few weeks you might see constant PR’s coming from many different biotech penny stocks. Especially since commodity stocks have been beat up recently and many mining penny stocks have lost their luster recently.

The key now is finding these low priced biotech stocks. The best thing to do right now is form a penny stock list that features some different biotech names. Then look for companies with some cash and low burn rates. Then monitor news on large cap biotechs and general sector news as well. Keep in mind that this positive news cycle may not last. If it does……great, but if it doesn’t you have to be prepared to get out of the trade breakeven or at a small loss. So the best way to approach this trend might be as a trader not an investor. Remember there are penny stock flippers out there who trade these types of trends for a living. So be prepared, do your homework and remember to only commit a portion of your liquidity to an idea.

 

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S&P 500: Breakout or Breakdown?


S&P 500 Performance Chart


s p 500 chart S&P 500: Breakout or Breakdown?
This week, with the exception of US Steel (NYSE:X) and a few others we have not only seen tremendous earnings come out of the large caps but positive guidance as well. This has led us to become focused on the 1113.00 level with the S&P 500. The market closed above this key number on both Monday and Tuesday, but this widely watched level remains in play.

Tuesday’s action was highlighted by positive earnings from Dupont (NYSE:DD) and Lockheed Martin (NYSE:LMT), but those results only propped up the market slightly. Every rally seemed to be met by profit taking.  Commodity stocks were among the weakest. The story may not play out until Friday when the GDP report is released. In the face of these great earnings this rally has seemed to stall out on economic numbers.

The ongoing trend tells us that more positive earnings will be released. But the question is, are the next wave of upside surprises factored in already? Only time will tell. Now how will this market impact the OTCBB ? Common sense says that if Fed Ex (NYSE:FDX) and United Parcel Service (NYSE:UPS) have positive outlooks, we may see a micro cap retailer develop into a hot penny stock. We also could see some bottom fishing in some gold and silver mining penny stocks due to a pullback in metals. The tough part is to decipher which mining names are actual values. We all have seen various penny stock newsletters highlight the next mining home run. So if you act on the commodity pullback be selective and do your homework.  We will have more penny stock ideas on the way soon.


 

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Hot Biotech Stocks like (AMEX:RPC) Primed to Rise

Radient Pharmaceuticals Corporation (AMEX:RPC)


rpc penny stock Hot Biotech Stocks like (AMEX:RPC) Primed to RiseWe hope that everyone is enjoying their summer.  We have not come out with a profile in a while because the markets have been turbulent.  We have been seeing them bounce back lately and the Dow is back over 10,500.  This is a crucial point.  There is a lot of indication that big money is coming back into the markets investors are gaining confidence.

We have seen some small cap stocks have a substantial amount of money invested into them over the past few weeks.  This is good news after we saw a huge drop off in the amount of money being invested in the small cap arena.   Most penny stocks were either stagnant or drifting lower on little volume.

We have located an AMEX company that we feel is worth putting on our radar.  RPC is a company that has had a lot of press so far this year.  They company produces and markets cancer testing products.  Back in early April RPC ran from .23 to 2.19 virtually over night.  Millionaires were literally made in a day.

We have seen a drop off in price since then.  It has found a home trading near the 1.00 level.  When a company like RPC makes an 800% plus run like it did, we usually see two events happen that cause the share price to drift lower. (1) People take profits.  If you just made that type of gain on your money you would be crazy not to take some of the winnings off of the table. (2) Shorts will come into the stock because they know that people will be taking profits and it will cause the price to decline.  They take advantage of the declining price and even help it to go lower with the additional selling pressure that is applied when a stock is shorted.

radient pharma stock chart Hot Biotech Stocks like (AMEX:RPC) Primed to Rise


This is why I love RPC.  The stock was mostly accumulated at much higher levels.  There was a period of 3 days back in April in which well over $100 million dollars worth of stock was bought.  This is a huge amount of money for a small cap company like RPC.

Any type of news from the company could allow for a huge gap up.  If you look at the chart you will see that most of the accumulation was done well above these levels.  The break even price for investors is much higher than the current levels.

Make sure that you do your own research on RPC and consult a professional to see if it is a suitable investment for you.  It has been known to be volatile in the past but at the same time it has been a huge home run for speculative investors.

We will keep you updated on RPC and periodically inform you of its progress.  You can start your research at http://finance.yahoo.com/q?s=RPC and check out the company’s new website at http://www.radient-pharma.com/.

 

11:33 am | | Tags: , | 1 Comment »

Will Fed Ex Deliver for Penny Stocks?

Fed Ex Issues Positive Guidance


fed ex Will Fed Ex Deliver for Penny Stocks?Last Friday was an important day for the stock market. The S&P 500, which happens to be the benchmark index for U.S. equities closed above 1100. This morning we were also met with positive earnings from market bell weather, Fed Ex (NYSE:FDX). More importantly, Fed Ex issued positive guidance. This news has the pundits talking about a rally to 1150. Fed Ex has often been a great indicator of the economy and this may give bulls a little more courage. We may also see some of the money come of the sidelines due to the fear of being under invested.

Now we have seen many false starts on rallies recently, but considering that FDX’s competitor United Parcel Service (NYSE:UPS) also had good numbers, this rally might be for real. As mentioned above, many bulls are calling for 1150 on the S&P, but there is a patch of resistance above in the 1115 area. Skeptics also say we could have a re-tracement to 1040. However, right now it looks as if the sentiment is changing to positive.

How does this impact penny stocks ? We always mention on this blog that it’s easier to find hot penny stocks in bull markets. Just from the mere fact that investors are more willing to speculate when they have gains and feel good about there portfolio in general. The positive sentiment leads other penny stock newsletters to be more bullish as well. The best way to play this out is to look for a close above 1115 on the S&P 500 before getting aggressive. In addition to picking your favorite large caps, compile a penny stock list too. Past history has shown us that a rising tide can lift all boats. Just remember to invest accordingly, limit your losses and always save some liquidity.

 

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Biotechnology Stock Genzymes’ (GENZ) Takeover

Another Way to Play Genzyme (GENZ)


biotech stocks genzyme genz1 Biotechnology Stock Genzymes (GENZ) TakeoverBiotech company Genzyme (NASDAQ:GENZ) was the subject of takeover rumors. CNBC’s David Faber broke the story on a possible hostile takeover bid from Sanofi-Aventis (SNY-NYSE). Shares of Genzyme rallied sharply and are up roughly 17% at the time of this entry.

As many of you know, the vast majority of takeover rumors don’t happen. However these rumors offer both traders and investors the opportunity to make fast, short term profits on both the long and short side. Sometimes the best way to play hot stocks like GENZ is through an ETF. For instance,there is a biotech ETF run by Merril Lynch (AMEX:BBH). Shares of BBH represent ownership in several different biotech companies, including GENZ. Genzyme accounts for roughly 7% of BBH’s holdings.

When a stock like GENZ gets hot, volatility increases too. While shares of takeover stocks often offer more liquidity than penny stocks, they are just as risky. If an investor is right, he can attain returns that are only usually seen in hot IPO’s or hot penny stocks. If wrong, 20-30% intraday pullbacks happen frequently. In other words, the wishy-washy trader is usually shaken out.

This is why ETF’s are attractive, and keep in mind this doesn’t only apply to BBH. Buying shares of an ETF in lieu of buying a takeover stock offers less upside, but it also offers a less risky way to trade. The rationale is very simple. Many investors are afraid to jump is a stock that has moved up in a short period of time. Even if they think the equity will continue to move higher. So many times, the investor just passes on the idea and kicks them self later for being on the sideline. Now, by buying the ETF that contains the same equity, they still get to participate. Not fully, but they are represented. This strategy isn’t for everyone, but it decreases risk and small gains add up. So get familiar with a few different ETF’S and their symbols. Remember, when stocks that are in an ETF moves, the ETF sometimes lags behind. The rules of supply and demand still apply, but you have to be quick and prepared. SO add in addition to your large cap and penny stock lists, throw a few ETF’s on your stocks watchlist too.

 

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