Thursday, May 06, 2010

VVUS

Yes, I know its crazy to be recommending individual stocks in the midst of a potential trade of the year to the downside, but, MMRF is up between 30-50% in the three days since I first mentioned it to my subscribers and then posted it here for all.  That doesn't mean VVUS will do as well, but it does illustrate that given the right technical set-up and underlying fundamentals, there is money to be made on the Long side, bear market or not.


The above chart is what I posted Wednesday, leaving the name and prices off until I could be convinced that VVUS is a special situation.



Above, we have a fresh Buy on the Weekly Trend Model, which is even more impressive if you look at the Monthly chart above and focus on the most recent dozen or so bars of in the pattern.



Above is the 240 minute chart along with a nice looking EW count.  The stop on this chart is at about $11 which coincidentally is the projection price extreme for any 4th wave from current prices.  There are options available, the June 10's and September 12.5's are on my trading screen and I'll be in one of those strikes by the time you read this.

The fundamental story, which is what categorizes VVUS as a special situation, is succinctly, their drug pipeline that includes advanced stages of testing in drugs that address obesity (Qnexa), diabetes (Qnexa)  and men's sexual health (Avanafil):

The VVUS balance sheet includes about $3.00 per share in cash and with a market cap of just under $1B with two potential blockbuster drugs addressing huge markets, if even just one of them get's the  FDA stamp of approval, this is a multi-billion dollar company.

In summary, while making daily profits with inverse equity ETF's in a bear market, VVUS, along with MMRF and NNVC, are all worthy LONG speculations.  Should the market make a low here (unexpected) and turns up, these three look even better.


A

1 comment:

Allan said...

Some background perspective on what happens when you first product gets approved:


http://www.investors.com/NewsAndAnalysis/Article.aspx?id=532404