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Junior Biotech Bounces off $1; Chart Trying to Turn Bullish
By: AllPennyStocks.com News
August 13, 2010
Biotechnology stocks are always some of the most volatile plays in the stock market. Because of their ability to suddenly explode, they are a focus of attention for traders of all sorts. Fundamental traders will dig deep into pipelines and conduct months’ worth of due diligence with the intention of finding the “hidden gem” of a company with great potential. Momentum and technical traders are drawn by the allure of breaking news that propels massive volume and a price spike in the blink of an eye. Whatever the style and whatever exchange, biotechs have a huge following and justifiably so.
Nanoviricides Inc. (OTCBB:NNVC) is a development stage company that is creating special purpose nanomaterials for viral therapy. The Company's novel nanoviricide™ class of drug candidates are designed to specifically attack enveloped virus particles and to dismantle them. Viral diseases including, but not limited to, H1N1 swine flu, H5N1 bird flu, seasonal Influenza, HIV, oral and genital Herpes, viral diseases of the eye, Hepatitis C, Rabies, and Ebola virus are targets for Nanoviricides drugs.
NNVC issued a press release late in July to announce that it has achieved promising results in studies of their compounds to battle the Ebola virus. The United States Army Medical Research Institute of Infectious Diseases (USAMRIID) was involved in the research as the studies were conducted at their facility in located at Fort Detrick, Maryland. USAMRIID is the lead medical research laboratory for the U.S. Department of Defense's Biological Defense Research Program, and plays a key role in national defense and in infectious disease research. Biotech investors take notice of this connection for “baby biotechs” because a tie with the government or a large pharma opens the door to many possibilities.
Technically speaking, NNVC has been on a slide for the last 3 months since touching a nearly 4-year high at $2.64. Presently trading in the area of $1, it is still well above its 52-week low of $.41, but those levels may not be seen (barring detrimental news) as $1 should give pretty good support to the price per share. Should $1 not hold, even more support is sitting below that present price at $.80.
The lower indicators are aligned nicely for a possible reversal for NNVC. Even though the MACD is still trending down, the histogram is in a nice uptrend over the last 3 months giving indication that a flattening and turning of the MACD may be coming. The classic “pincher play” formation of the PPO and ADX is happening, although not “super deep.” The last time NNVC aligned this way, approximately an 80% bounce happened, followed by a solid uptrend being established afterward. While past performance is no guarantee of future action, many technical traders look at similar historic setups. The Accumulation/Distribution has maintained a slight uptrend indicating the buying pressure has still been maintained throughout the downtrend as well. Some very classic technical indicators, such as the CCI and Relative Strength Index, are turning and coming out of oversold levels. The psychological support level of $1 (often called “The $1 Boogie”) may also have an impact here as the chart is trying to make at least a temporary turn.
On the upside, resistance is going to be seen at $1.26, which will also fill the gap that was created last week. The PPS resistance is going to be strengthened by the 20 day moving average (currently at $1.30). If NNVC can push through the 20dma, the 200dma is sitting at $1.40 and will be a solid test to if the NNVC chart has found a true bottom. For a chart to become truly bullish overall, the price per share needs to be trading over the 200dma.
Nanoviricides is still developmental, but a company that has kept the interest of traders since its inception in 2005. Overall, the NNVC chart is still trending south, but it appears to be trying to find a bottom at $1. If this level cannot be held with buying pressure, it very well could test $.80. The volume is still very high enough to accommodate liquidity for traders to get in and out and keep the bid/ask spread tight. With any stock play, risks are inherent, but biotechs can carry an even higher level of volatility. Remember that this is only AllPennyStocks.com's interpretation of NNVC and its stock chart. We strongly encourage conducting your own due diligence and consulting with a financial advisor before making any investment decisions. Trade smart.
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