Saturday, July 25, 2009

Mid-Year Review

At the bottom of my Two-thousand and nine predictions post dated January 1, 2009, I summarized my big picture view of the coming year as follows:

The market is going to be volatile no matter what direction it goes, but a major bear market has asserted itself and until proven otherwise, that's the course of future prices. My best pick for appreciation this year is once again NNVC and it is not too late to buy this stock based on where I am suggesting it can go in the years ahead. Finally, Gold and Gold Stocks may be my next best idea if the rally from the late October lows extends on the heels of geopolitical and domestic economic cycles that are running the scary side of miserable in the current global environment.


My first prediction was really an assessment, that a mega bear market had asserted itself and that premise would continue until, "proven otherwise." The issue today, just past the mid-point of the calendar year, is whether or not the action of the past three months has nullified the bear market premise?

Analysis

DJIA - Weekly



The above chart is the DJIA Weekly (line) chart going back to the beginning of the end of the bull market that ended two years ago, mid-2007. The chart indicates a five-wave advance from mid-2002 through mid-2007, taking 5 years to appreciate from about 7500 to just above 14,000 in October, 2007.

That entire advance was erased at the March 2009 lows. 60 months of advance erased in 16 months of decline. The Weekly False Bar Stochastic has generated a non-confirmation as prices have made a new recovery high without the confirmation of the FBS making a similar new high. The Profit Taking Index ("PTI") is at 53 (lower right on chart). Any PTI above 35 is confirmation that a Wave 4 is in play and that Wave 5 will make new lows.

Below, the advance from the March 2009 lows has retraced between 25-32% of the entire 16 month decline. Not only is this a normal range for an orthodox retracement, it is at the lower end of what traditionally is a 50-68% retracement:


DJIA - Weekly with Fibonacci Levels



Neely & Prechter


Bolstering the implications of the above charts and indicators are the market views of Glenn Neely and Robert Prechter. On June 17, 2009 I posted a press release from Glenn Neely in which he forecast a 50% drop in the S&P 500 by year end. The market has rallied and is now at higher levels then at the time of his forecast. Neely has not waivered from his forecast and in fact is now suggesting that the persistence of this rally is likely to cause his forecast to be over optimistic and that the ensuing decline will be worse then he initially expected.

Robert Prechter had been short the market from July 17, 2007 until February 23, 2009. On the later date he issued an interim Elliott Wave Theorist in which he recommended covering shorts and standing aside. The market made it's price lows about 10 days later and has been rallying ever since. This is what he wrote in February:

We have now earned 800 [S&P] points worth of gains. This is surely the largest number of points that anyone has ever made, or will ever make, in the S&P futures in 19 months, and maybe ever.


Prechter titled his latest [July 17, 2009] Elliott Wave Theorist, "THE BOUNCE IS AGING, BUT THE DEPRESSION IS YOUNG." In it he reiterated his big picture analysis and Wave count as a Primary Wave 2 Up afterwhich a Primary Wave 3 Down will decimate global markets.

Thus, Neely and Precther are both suggesting the worst part of the bear market still lies ahead. My operative wave count remains a Wave 4 up that is still not yet done, to be followed by another leg down to new lows, below 6600 on the DJIA. These all represent forecasts, big picture views that are used more for perspective then trading.


Summary


In summary, my analysis from January 1 remains unchanged, that we are in a mega bear market that has not yet been nullified and in fact, is approaching it's next leg down.



NanoViricides - NNVC

In my January 1 blog I also named NNVC as my "Number One Pick for 2009." The stock closed out 2008 at $0.81 and sits at $0.69 today, about 15% lower for the year. Has anything changed?

Yes. I've chronicled the laboratory progress of the company in numerous posts over the past 6 1/2 months. In addition to what has already been posted on this blog, here are some snippets from, "DrFeelgood," a pseudonym for an NNVC shareholder who posts on iHub's NNVC board and who seems to know more about the company and its prospects then anyone I have encountered outside of management itself.

DrFeelgood, July 15
AdenoViriCide will be approved for use against all Herpes and other indications will be expanding. Market potential will be more than $10 billion. Upper-middle opportunity should be in the $4 billion range. HIV-Cide will be approved and more than a year into use as HIV antiviral to reduce viremia to functionally zero. HIV-Cide will also be tested for use against other indications caused by other Retroviruses. NNVC will capture at least $5 billion of that market. BioShield will be feeding $500 million a year into NNVC to maintain a supply of strategic antivirals. FluCide will be emerging from Phase-3 trials for commercial use against seasonal variations, while it will be added to emergency stockpiles for use against High Pathogenic Influenzas all yielding around $1 billion a year with another $5 billion in potential market saturation after approval. RabiCide will be in use worldwide for another cool $300 million. Yes, market share could easily approach 75% which would dwarf these numbers.

If NNVC licenses all the above, royalties would be based on 14.8 billion in sales yielding almost $3 billion a year in payments not including benchmarks for expanding market and indications. Market cap would easily surpass $100 billion or $800 a share and rising. Like I said $100 a share in 5 years might be a tad pessimistic.

Another FG July 15 post:

At the peril of posting something that might be read after a PR in the morning, if there's a PR, I post an updated version of "For What We Await."

1) Generally, from a global perspective, we await FDA approval of a paradigm changing technology applied to antiviral therapy. No matter which of the first indications to emerge from clinical studies and into the market, what will find approval will be an antiviral that is, first, non-toxic to the host system at therapeutic levels while at the same time being more potent as an antiviral than any other in the history of antivirals. It will, second, target and destroy virus particles by exploiting the very properties that allow viruses to exploit host cell properties. Third, it will accomplish the above by mimicking the properties of host cells; that is, viruses will "think" the nanoviricide is a comfy little cell to call home while it spins off duplicates from safely within. But, this won't be what it "thinks," for it will, fourth, attach to the surface of viruses like eggs thrown by teenagers at slowly passing cars attaching to the surface paint. Unlike cars and eggs, the virus' outer shell will be torn to fragments spilling the capsid interior and exposing the soft insides to the ravages of the immune and metabolic processes. Nothing else yet works like a nanoviricide.

2) There are more than a dozen indications in development by NNVC. However, the main focus now seems to be five virus types: Orthomyxoviridae or more specifically Influenzas, Adenoviridae or more specifically eye herpes and EKC, Rhabdoviridae or specifically Rabies, Retroviridae or specifically HIV, and Flaviviridae or specifically Dengue. If we examine these 4 foci more closely we get a few insights into some apparent executive strategy.

Orthomyxoviridae encompasses Influenza A. NNVC is currently testing against H1N1, one variant of which is the Influenza endemic to Swine. However, the nanoviricide being used has as a core FluCide-1. FluCide-1 has also been tested against H5N1 Bird Flu. So, should approval come for any High Pathogenic Avian Influenza (HPAI) such as H1N1 or H5N1, it immeditaely opens the door to the entire line of Influenza A including Bird flu, Human flu, Swine flu, Horse flu, Dog flu, and Cat flu. That one success will most probably also be the gateway to Influenzas B and C since those are also Orthomyxoviridae. [billions and billions of dollars]

The focus on EKC and now eye herpes is even more interesting. Eye herpes antiviral is administered as a topical solution, an eye drop. In animal and Human testing the inflammation either clears up or it doesn't. If it clears up, the clearing can be timed. So, it either works or it doesn't. Of course, there is also toxicity and allergic reaction, so that in testing it either causes complications or it doesn't. This doesn't mean that there isn't a need for extensive testing and investigation; it does mean that the testing itself is measured in days rather than months or years. EKC/Eye Herpes/Herpes Keratitis success then immediately opens the door to the entire family of Adenoviridae indications for Humans which ranges from the common cold syndrome to pneumonia, croup, and bronchitis. [billions and billions more dollars]

Rabies testing is probably the least interesting of the five, yet it too is exciting. There are more than 50K deaths each year from Rabies. Rabies is 100% fatal after the onset of symptoms. Om testing, following infection and the onset of symptoms, 30% of the mice in two RabiCide studies survived. Wow. Historic.

Recent HIV testing indicates that nanoviricide is a functional cure for the disease using HIV-Cide alone. However, what many may not be aware is the various members of the genus Retrovirus are associated with cancer and tumor growth and can trigger those conditions. Moreover, HTLV-1 Retrovirus causes T-cell leukemia and T-cell lymphoma in Humans. Thus success with HIV could also be the pathway to a nontoxic treatment for some types of tumors and cancers as well as T-cell leukemia and T-cell lymphoma.

Finally, there is Dengue. Dengue is the gateway to BioDefense. Success with Dengue leads to other stockpile antivirals such as Ebola, Marburg, Lassa fever, Hantavirus, Crimean Congo hemorrhagic fever, Rift Valley fever, Yellow fever, West Nile, and Western equine encephalitis among others. Oh, wait, Ebola is also currently on the plate with Dengue.

In the immediate future we are looking for news regarding HIV-Cide testing, funding for Dengue testing, progress on the progress for the Eye Herpes tests at Feinstein Institute, LSU and of course the MTA pharma. We also await the RabiCide update from the CDC and FluCide news from LSU.

FG, July 6
>>"What excites you the most over the next 6 to 18 months?"

Hard to say which of several excite me most. All seem equal. In no particular order, what excites me in the coming 6 to 18 months:

1) The promise of veterinary use against eye herpes. This is a much bigger market than many realize.

2) Taking EKC into clinical studies. There are parallel studies in the works for EKC/eye Herpes. Once these pre-clinical studies are complete there should be an IND filing with or without the current MTA big pharma on board. Once the tox package is complete, there will be more pharmas interested in licensing.

3) HIV may be history. Sure there will be other therapies developed to replace the current stable of drugs used for HIV maintenance programs, but none of them are functional cures since eventually all lose their efficacy. First, HIV can't shift or mutate away from HIV-Cide. Second, from all I've read up to thise point and the more I read the more I think HIV-Cide may actually cure the disease. If HIV-Cide actually does cause infected T-Cells to form a viral synapse and bud its load of HIV particles, then over time HIV would be eradicated from the entire host system. There is nothing else out there even close to the same prospect. Vaccine for HIV within 5 years? Well, maybe, but doubtful. Even so, what about all the millions of people infected for whom a vaccine is totally worthless?

4) DengueCide should be eligable for orphan drug status. Sure there are millions of cases every year around the world, but there are only a few cases within the US, and those cases are becoming more numerous with every year as Dengue territory migrates north from the tropics. There are far less than 200K cases of Dengue in the US each year, so for the US it is an orpan drug. Puerto Rico, Guam, U.S. Virgin Islands, American Samoa, Northern Mariana Islands, as well as the southern most states and Hawaii all are in need of Dengue antivirals and that need grows each year. Moreover, Dengue antiviral will be the gateway to Marlburg, Hanta, Rift Valley, Chikungunya and a host of other vector born viruses.

5) A licensing agreement for the completion of development of any of the drugs listed above plus FluCide, which I haven't mentioned until now. FluCide should be the largest market of the lot. Since the influenza market potential is the largest of the lot, a license to complete the development of FluCide should fetch enough in upfront, annual, and benchmark payments to cause earnings to exceed 25 cents a share all by its lonesome. Now, add 2 or 3 agreements and then think about it. Pretty exciting, yes?


Forecast: NNVC

I reiterate my forecast that every 10,000 shares of NNVC at today's prices [$0.69] will be worth at least $1,000,000 within 5 years.



Gold, Silver & Precious Metals

The third subject of my January 1 post was the outlook for Gold. I've expanded that subject a little today, to include in addition to Gold, Silver and other Precious Metals.

The XAU was at 122 on January 1st and closed at 149.50 this past Friday. That's a gain of about 22.5% for 6 1/2 months. AUY went from 7.67 to 9.45, for a gain of 23% and NG went from 1.56 to 4.18, for a gain of about 170%. SRSR which I highlighted on July 1 at 8 cents, is at 17 cents, for gain of about 112%.

The moral of this story? A basket of select mining shares offers way more price appreciation potential then a Gold index or Gold ETF.

XAU - Weekly



The Weekly XAU chart above suggests further upside for now. Prechter is forecasting lower Gold prices before a tradable bottom while Neely is suggesting the opposite, higher prices and then a tradable decline.

My summary for this sector is to keep seeking out technically attractive mining stocks that offer above average and occasionally stellar returns.


2009 Summary - Updated

The market is going to be volatile no matter what direction it goes, but a major bear market has asserted itself and until proven otherwise, that's the course of future prices.

Update: Unchanged

My best pick for appreciation this year is once again NNVC and it is not too late to buy this stock based on where I am suggesting it can go in the years ahead.

Update: Unchanged

Finally, Gold and Gold Stocks may be my next best idea if the rally from the late October lows extends on the heels of geopolitical and domestic economic cycles that are running the scary side of miserable in the current global environment.

Update:
Unchanged

New for remain months of 2009

Swine Flu

From The Los Angeles Times, July 25:

Hundreds of thousands of Americans could die of the swine flu over the next two years if the vaccine and other control measures for the new H1N1 influenza are not effective. And, at the pandemic's peak, as much as 40 percent of the workforce could be affected, according to new estimates from the Centers for Disease Control and Prevention.

This may present an excellent trading environment for drug makers' stocks and I have gotten the ball rolling with my July 21 Mini-Flu Basket of vaccine-related stocks. But let's not forget that during the Bird Flu scare of 2006, NNVC ran from 10c to $3.75. Since that run, NNVC has successfully tested its anti-virals and has gotten the attention of the CDC, NIH, LSU, and major pharma. Among the targets for NNVC's anti-virals are Swine Flu, Bird Flu, General Flu, Herpes, HIV and Rabies. Whatever the markets do in the second half of 2009, NNVC will be in it's own world of investor discovery. It remains my top pick for the year.



A

15 comments:

Anonymous said...

Allan, As a long time follower of your blog I would like to thank you for your tremendous dedication. This latest post shows how serious and unselfish you are and demonstrates your unbelievable generosity to share a lifetime of practiced skill and learned knoledge with all comers. You ask absolutely nothing in return? Thank you Allan. I truly appreciate your hard work. I will re-read this post several more times before I have absorbed all the valuable insight from it. Joe/NYC

Anonymous said...

knowledge

Anonymous said...

Allan asks absolutely nothing in return.... even the donate button on the right is optional.
My trading skills are becoming far better through this block while once i compensate my previous(own mistakes)losses (and i will), this button shall be used on every occasion.
Thanks Allan,
Serge

Anonymous said...

My top pick for 2009 is SPNG.OB for the following reasons:

1. Technical indicators have turned positive. Of course there could be the possibility of false signals but

2. Fundamentals looks very strong. Estimated fiscal revenue for 2009 is $50 million with a pre-tax net income of $10 million. Revenue projections for fiscal 2010 look greater than $200 Million. Point being...Their revenue and profits will be growing exponentially.

3. Management has a stock buy back program of 150Million shares...55million already bought.Program ends Sep09.

4. BOD(insiders) have purchased 18million shares. And finally

5. It is said there is a massive number of shares illegally short and could create a short squeeze of epic proportions...much greater than that of VW!!!!!

Do your DD and decide accordingly.

Burnhard said...

been trying to contact Eugene and get in depth info, papers. the fellow is phd, so literature should be abundant. yet he keeps me on hold...

any idea.

he told me he's working on the video presentation last presented (wants to put it online... )..

Anonymous said...

Awesome! Awesome! Awesome!

Dude:

I pay for analysis that can't hold a candle to this kind of commentary.

Thank you, thank you, thank you.

Hitting the Donate button, you deserve it.

Anonymous said...

Well, at least SPNG keeps updating their WEB site while NNVC has stopped updating in 2007 - check it here -
http://www.nanoviricides.com/products.html

Allan, by the way, has NNVC published anything in Medical Journals? , they would look more reliable if they did. I made some research but cant find any official publication from them in Medical Journals. If they did they might have attracted some institutional investors interest already, otherwise all their achievements look ungrounded.

If NNVC is a serious company they should at least update their WEB site.

The stories (only) about NNVC potential make me greedy to buy but at the moment I am keeping away from both NNVC and SPNG.

Lili

Anonymous said...

Most of the market leaders have just completed 2nd stage bases and broken to new highs. They say the market climbs the wall of worry, seems so true.

Anonymous said...

dear allan, if you want to see how gs trading system works,take a look how they're trading their own stock today,so no wonder they cay repay tarp money and sure they get more than only pay tarp.

Anonymous said...

SPNG....isn't that the company that sells sponges with soap in them..used to wash cars?

Anonymous said...

Actually SPNG also sells Dog Food Bowl Cleaners....2,000,000,000 thats 2 BILLION shares...I think I know who is getting rich there ..maybe SPNG can SAVE THE WORLD by sponging up the VIRUSES!!!

Anonymous said...

Yes maybe SPNG can SAVE THE WORLD with their SPONGES!!!!!

HaHaHaHaHA !!!

Anonymous said...

check SQNM and CGEN

DrFeelgood said...

>"The stories (only) about NNVC potential make me greedy to buy but at the moment I am keeping away from...NNVC..."

Boy, if I had a dollar for every time I've heard this, I'd have 2 dollars. If you think they are stories, you aren't looking in the right places.

There are other ways to confirm biotech startups and what they are developing. One is to research the underlying theory for the structures, while the other is to deep research those involved. You don't have to be able to read a scientific paper and understand its contents. You only have to see what's been published in the past by the principles. You then only have to check the reputations and prestige of the journals.

By the time papers are published on NNVC's technology, the SP will already be several bucks. I guarantee it. But then, my guarantee is only that of an anonymous blog moderator. So, caveat emptor. --Doc

Burnhard said...

hmmz and if i then reply with "what the hell is that supposed to contribute" ...

you reply with "just DYODD" :)