The Deipnosophist

Where the science of investing becomes an art of living

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Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

19 July 2009

Champollion clues and secrets for transliterating micropsia

The micropsia sequence of posts were not really fair, mostly because I revealed few items, if any. But now has come the moment to reveal several items. First, the companies (in order of presentation)...
1) BioDelivery Sciences/BDSI
2) Spectrum Pharmaceuticals/SPPI
3) OncoGenex Pharmaceuticals/OGXI
4) Vion Pharmaceuticals/VION
5) Isis Pharmaceuticals/ISIS
6) Johnson & Johnson/JNJ
7) Volcano/VOLC
8) Thoratec/THOR

You will discern rather quickly my second 'revelation' -- the obvious fact that all eight companies derive from one key market sector, health care. I selected eight companies from various groups from that leading sector, but with different chart patterns.

Perhaps surprisingly, each of the eight charts is bullish -- in some time frame; profoundly so for charts 5 through 8. To discern true direction, expand and contract periodicities. For example...


[click on all charts to enlarge]

NB: (chart above)
● The massive ascending triangle (not identified) and 13 year base since Thoratec's ultra-hot IPO;
The Panic of 2008 (my term) did not harm THOR one whit, as the shares raced to $33 from $13;
● The recent high ($33.43) found initial resistance at the high from 13 years ago, as it should;
● The past 6 months, and then some, trade as a symmetrical triangle (pattern identified), which, typically, is a continuation pattern of the prior move.


NB: (chart above)
Volcano/VOLC was another hot IPO, although the shares hesitated for ~4 weeks (the markets declined in June/July 2006), before rising explosively to $23 from $8 in a mere 8 months.
● The entire pattern, since IPO, forms as one large symmetrical triangle (identified)
The past two years build as a massive W bottom (identified)
● Crucial upside breakout occurs at ~$17.

Now is as good a time as any to repeat myself:
● Focus on the leading stocks, groups, and sectors;
● New market leaders become obvious during general market declines;
● Leaders might correct but only to a new intermediate term base, not degrade into a trend of lower lows.

Of course, I could continue to delineate patterns and trend lines on chart after chart -- not solely the micropsia group -- but I suspect you get the idea, so will stop here. I welcome your comments and insights about these eight stocks, or any other investment opportunities of interest to you.

The very nature of the discounting mechanism means that today's news was factored in months ago... and acted upon then. Investors buy today in the attempt to sell dear(er) tomorrow.

"Simple questions have simple answers,
difficult questions have difficult answers,
and the supremely difficult questions have only faith as their answer."

I am not the type of investor to make needless predictions, as you know, but current market action sure looks to me like it climbs its proverbial Wall of Worry, the right side of its chart. So have faith; the cream always rises to the top.

Full Disclosure: Long most of the stocks mentioned in this post.
-- David M Gordon / The Deipnosophist

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