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9 Dec

A Biotech Breakout; 3 Stocks Under $2 Preparing For Flight


Adeona Pharmaceuticals Inc. (AMEX:AEN) operates as a pharmaceutical company that develops medicines for central nervous systems. It primarily focuses on licensing product candidates that have demonstrated a certain level of clinical efficacy and develop them further to commercial collaboration stage. A recent 157% move from $.49 to $1.26 illustrates why small caps can be so lucrative is you can time the swing right. The market cap is tiny on AEN at $35.44 million and it has a Beta of 2.27 which is right in my wheelhouse. Above all 3 major Moving Averages, the chart below shows how I might try to trade AEN from here. I am long biased on Adeona off either the trendline or the $1 dollar range with  a tight stop after either entry. Solid short interest here could assist the bulls too at 7.49 days to cover, although I bet that has thinned some on this 157% move already.

Cell Therapeutics Inc. (NASDAQ:CTIC) is a a biopharmaceutical company, engaging in the development, acquisition, and commercialization of drugs for the treatment of cancer. Today CTIC announced that it has entered into an agreement to sell, subject to customary closing conditions, $20 million of shares of its Series 14 Preferred Stock and warrants to purchase shares of its common stock in a registered offering to two institutional investors. The price action has been all bull recently and this news could be good for today but it’s hard to say for sure until the market opens. It is a dilution deal which could attract sellers and discourage buyers, especially since it’s up 42% already from its recent low. CTIC has a market cap of $266.01 million and a Beta of prepare yourself… 5.41!!! The short interest here alone could send this stock screaming at 20.14 days to cover, should it continue to creep up the chart. I am long biased overall but believe it could see some selling based on the offering.

Arena Pharmaceuticals Inc (NASDAQ:ARNA) is a clinical-stage biopharmaceutical company, focuses on discovering, developing, and commercializing oral drugs in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. On November 30th I alerted ARNA here at $1.39 before it ran 40% to $1.98. My bid discussed here 5 stocks under $5 I like to close out November never filled however but a few subscribers hit the offer and cashed in big. Say what you like, I think ARNA isn’t done yet and $3 is right around the corner. Having said that it’s definitely overbought so watch for the pennant of bull flag to hold before it reloads and give shorts another headache. The market cap on this beast is $271.60 million and it has a Beta of 0.69 which isn’t as volatile as I’d like but there are always short term exceptions to my swing trade rules. Given that the short interest is 17.43 days to cover it’s possible ARNA can hold this bull flag being bid up on short cover alone until the Relative Strength can settle and a new wave a buyers like myself push into the stock.

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