StemCells, Inc (STEM)

Company

"StemCells, Inc. is a development stage biotechnology company focused on the discovery, development and commercialization of stem cell-based therapies to treat diseases of the nervous system, liver, and pancreas. The Company's stem cell programs seek to repair or repopulate neural or other tissue that has been damaged or lost as a result of disease or injury. StemCells is the first company to directly identify and isolate human neural stem cells from normal brain tissue. These stem cells are expandable into cell banks for therapeutic use, which demonstrates the feasibility of using normal, non-genetically modified cells as cell-based therapies. StemCells is the only publicly traded company solely focused on stem cell research and development and has more than 40 U.S. and 100 non-U.S. patents, as well as 100 patent applications pending worldwide." (company website)

Buy

31-Jan-05. At the beginning of 2005, STEM broke out with heavier than normal volume. Since then it has pulled back to touch up with the 50-day moving average and appears ready to resume its climb. Relative strength (RSI) is increasing, buying pressure (green +DI line) has crossed above selling pressure (red -DI line) again, and the loss of price momentum (PPO) has leveled off.

The only things that are a little worrisome are the huge price increase over the past four months (see sidebar) and the absence of any strong flow of money (CMF) into the stock. This one deserves careful watching.

Sell

10-Mar-05. The day after I bought STEM, the company announced that the FDA had put the company's clinical trial on hold. Since then I've watched STEM weaken for far too long: The 50-day moving average has leveled off and started to point down. Price momentum (PPO) is stuck in negative. The trend has no strength at all (ADX). Every time it crosses above the 1-month average (dashed blue line) it immediately pulls back.

Since the company has no other products ready, the FDA move essentially puts the stock on hold. I suppose I could wait around for the "issues" to be resolved, but there is no telling how long that might be.