World Without Quantitative Easing (QE)

At 2:00 p.m. the federal reserve chairperson Janet Yellen acknowledged the conclusion of QE (quantitative easing) for the foreseeable future.  At one point, in the depths of madness during the past six years, the government was buying up to $85 billion a month in assets to stimulate the economy. That $85 billion a month equates to around a trillion dollars a year...

Acadia Pharmaceuticals: ($26.06)

It's been a wild week in the markets, and individual stocks will get tossed around with the predominate trend. To keep perspective a look at a daily chart of ACAD with fundamental comments attached.

We just experienced a -9.9% overall market correction low ending this week, and ACAD pulled back to around $22.00.  The stock held up well under the conditions.

The above chart is a current month (October) to date.  Despite the market correction of -9.9% that bottomed this week, the stock is up mid-month around +5%.  

Bottom Line:  Acadia has many potential catalyst's ahead listed below.

1.  Filing the new drug application for Parkinson's Disease Psychosis with Nuplazid by year end.

2.  FDA acceptance of the application within sixty days of filing.

3.  Potential priority review (6 months review time) with FDA application acceptance.

4.  Potential FDA approval in six or ten months from filing date.  

5.  Six to nine months after filing with the FDA, the company plans to submit to the EU for the same indication.

6.  The start of a phase 2 clinical trial for Parkinson's patients who have sleep disturbances, by year end.

Another Volatile Day

Some extreme technical readings are at play now that could signal a market bottom, or at least a strong bounce higher over the next few days.

 

The fear gauge, also known as the VIX Index has spiked to levels not seen since 2012.  The VIX can be used as a contrarian indicator.  In other words, when many are fearful (buying put protection) a buying opportunity could present itself, which is the contrarian view.

The New Highs / New Lows indicator is also at extreme levels that suggest, the risk of entering the market is less than buying when the indicator is at extreme high levels.  

Bottom Line:  These two indicators along with others that I follow have been reliable in the past to help determine market bottom readings, or at least presents a lower risk opportunity to buy stocks. Can the market continue to fall, by all means yes, but if you are looking to add a little market exposure here, the risks are less than when the market was at an all time high in September.  Thank you for reading.

Contact:  586-431-8000

Keeping It Simple

As the world markets sell-off, keeping it simple with charts is the soundest way to manage risk.  With that said, we have two charts to show below. First is the S&P 500, and following is the German DAX Index.

 

Simple chart of the S&P 500 with the prior support level at 189.66.  A break of that level then we are looking at more than just the average pullback that we have seen for the past two years.

Germany is Europe's most important country from an economic perspective, and as that country goes, so does the rest of Europe.  The chart above is the German DAX Index.  These are German corporations that trade within that index.  The index just broke prior support to the downside, and is down -12.6% from the high of 2014, putting that index closer to bear market territory.

Bottom Line:  Easy to see we are in a down trending U.S. market, and have confirmation from Germany's DAX Index that we have a global slowdown in particular.  The charts above have an intermediate term down trending outlook. Thank you for reading.

Market Down Trend Continues

The trend of the overall market effects the volatility of individual stocks. Acadia is caught up in a market that is currently down trending.  There is a high correlation of ACAD with the XBI small cap biotechnology index, shown below.

The S&P will have a test of the most recent low coming up shortly.  Below is a daily chart with prior support at 192.33 that held just four days ago.  A break of the 192.33, than the next area of support is the very important 190.00 level.

Bottom Line:  All stocks get caught up in a market down trend, and ACAD is not immune from that. So as the overall market moves lower, so do the majority of stocks.  I expect the market to test the previous 192.33 low this week.  A break of the 192.33 level, then a very important test of the 190.00 support will come into play.  Thank you for reading.

Avanir Pharmaceuticals

Avanir Pharmaceuticals (AVNR) is a biopharmaceutical company, focused on acquiring, developing, and commercializing novel therapeutic products for the treatment of central nervous system disorders (CNS).  The company just released top line results of their phase 2 trial for the treatment of agitation / aggression in Alzheimer's patients that were statistically significant.  The stock increased almost 100% after the top line results were released.

Quick Facts:
206 million shares outstanding
2.3 billion market cap
$317 million in cash

Intellectual Property:
AVP-923 US 2026
AVP-923 EU 2023
AVP-786 US 2030
AVP-786 EU 2028

AVP-923  (Nuedexta)
Approved in the U.S. for (PBA), Pseudobulbar Affect, and approved in the EU also for PBA. Commercialization in the U.S. in 2011, and EU currently underway.

Phase 2 trial for Agitation / Aggression in Alzheimer's patients:
JAMA Phase 2 Agitation Alzheimer's
Primary endpoint .001 on the agitation/aggression domain score of the NPI 
Stage 1 (baseline to week 5) .001
Stage 2 (week 5 to week 10 change) .02 
Cornell Scale for Depression in Dementia, 10 week  = .03

AVP-786 Adjunct Therapy Major Depressive Disorder
NCT02153502
Phase 2 - Results 2016

Bottom Line:  Avanir Pharmaceuticals has many moving parts in various stages of progress. The most important date for this company is the PDUFA date of November 26, 2014, which will be the FDA's decision on whether to approve AVP-825 for acute treatment of migraine. This is an inhaled treatment that has proven much more effective than oral capsule.  The recent top line results look very promising for AVP-923 in Alzheimer's patients who are experiencing agitation / aggression.  AVP-786 holds promise for CNS indications and it has patent out to 2030 U.S. Thank you for reading.                       
 

ACAD: Filled the Gap

A frequent term used in technical analysis is "filling the gap".  When a stock opens the day much higher than the previous day's close, it creates a gap of no trading volume between the previous day's close and the current day's open.  I mentioned this gap last week after ACAD received the "breakthrough therapy designation" from the FDA, which was a very positive news release, but also noted that it created a gap in the chart that was pointed out below, last week.

Fast forward to today and the present chart that ACAD has, and you will notice that the gap was indeed filled today, and a small bounce higher once that occurred from the chart below.  

Bottom Line:  The gap that needed to be filled, was in black and white, and that is what technical analysis is all about.  Eliminating the emotion, and seeing the chart for what it really is created a low risk buy point.  We are long term shareholders of Acadia Pharmaceuticals.  Thank you for reading.