In my weekly segment where I take a look at recent trade ideas from across the web and give some of my own picks, I have another batch of setups to keep tabs on. This week we have 7 setups to keep an eye on.
1. Q1 Suggests Turnaround For Datawatch Corp (DWCH – Long)
Datawatch Corporation just released its quarterly fiscal report last week and the results are pointing to a brighter future for the company according to analyst Vince Martin. Total revenue was $8.23 million, an increase of 17% from total revenue of $7.06 million in the first quarter of fiscal 2016, while license revenue for the first quarter of fiscal 2017 was $4.36 million, a 38% increase from the $3.15 million recorded in the same quarter a year ago.
The company added both new customers and reactivated legacy users of its core Monarch product. Based on the report, the company is moving towards a subscription model and has pivoted to a “land and expand” sales strategy. Trust in management is gradually being restored as their revenue guidance is looking more realistic.
The chart for DWCH also looks interesting with the stock poised to return to the demand area of $7-7.5.
2. Martin Shkreli Says Short Immunomedics Inc (IMMU – Short)
Through a Facebook post, Martin Shkreli shared that he’s looking for an opportunity to short Immunomedics Inc on a bounce. “I can’t believe they got $250 million for this irinotecan prodrug. The world has moved on from old chemo mechanisms to targeted/IO. That’ll be the last $250 they get,” he mentioned.
Note that the company recently postponed its 2016 Annual Meeting of Stockholders previously scheduled for February 16 to March 3, keeping investors on edge. In the meantime, shares have gained a bit of support on the company’s announcement that it signed an exclusive global licensing agreement with Seattle Genetics Inc to the tune of $250 million. To top it off, other milestone payments of up to $1.7 billion, including an additional $50 million or negotiated economic splits relating to rights outside the United States, Canada and the EU have been discussed.
3. Innoviva Gains Revived On New Debt Repayment Plan (INVA – Long)
Innoviva recently printed its Q4 earnings results and headline figures came in mostly in line with expectations. However, traders turned their attention to the changed capital return strategy, which involves retiring up to $150m of 9% non-recourse notes on talks of a potential U.S. tax reform. This signals that the company is foreseeing a potential increase in royalties which could put them back in the black according to analysis from Early Retiree. The first generic Advair is projected to be approved by March or April, possibly providing a near-term boost for the stock on reduced uncertainty when it comes to royalties.
4. Reverse Stock Split In Catalyst Biosciences Presents Opportunity (CBIO – Short)
Biotech stock Catalyst Biosciences took on a 1-15 reverse stock split on Monday’s open and finished the day 19% higher. However, the split was done to fulfill exchange listing requirements and there has been no change to the underlying fundamentals. My analysis shows that reverse stock splits tend to be negative events for small cap stocks so this represents a potential short opportunity with a time horizon up to 10 days.
5. Trading Frenzy Ahead For Bitcoin (BTCUSD – Long)
The price of Bitcoin took a tumble last week after new attempts by the People’s Bank of China to regulate the market.
However, the bullish trend in bitcoin is still very much intact as we approach the deadline date for the approval of the very first Bitcoin ETF (exchange traded fund).
With the SEC set to vote on a rule change on March 11, analysts are warning of a trading frenzy that could see investors rushing into the cryptocurrency before the event.
I remain very bullish on bitcoin particularly in the run up to this ETF.
Note: You can get $10 of free bitcoin with this link.
6. Bet Against Quants And Algos With Universal Corp (UVV – Short)
Universal Corp is an independent leaf tobacco merchant that has been run up by momentum-driven algos according to The Friendly Bear. But management guidance is suggesting that revenues could turn out negative in the quarter. Apart from stagnating financials, the company faces a backdrop of slowing tobacco consumption and increased supply chain verticalization. The lack of sell-side coverage also makes this an interesting short.
7. Short Squeeze Into Earnings For Weight Watchers (WTW – Long)
Last week’s pick from the Trade Ideas team ended up hitting the stop loss but the group are up overall having picked three winners from four since I started following their free trade of the week.
WTW has earnings near the end of this month and is showing up on the “Trend Change” scan with a huge short float of 80%.The opportunity exists for a short squeeze into earnings as the weak hands look to exit their short positions by buying in competition with other long side investors and traders. A reasonable upside target for WTW is 16.00 with as top set at 11.53.
Thank You For Reading
Please make sure you are aware of the potential high risks involved in financial trading, especially when shorting stocks on margin and trading with leverage.