NeoPharm (NEOL)

Company

"NeoPharm is a publicly traded biopharmaceutical company dedicated to the research, discovery, and commercialization of new and innovative cancer drugs for therapeutic applications. NeoPharm has built its drug portfolio based on its two novel proprietary technology platforms: a tumor-targeting platform and the NeoLipid® drug delivery system." (company website)

Buy

25-Oct-06. NeoPharm is trying to recover from a long downtrend that began in January (sidebar).

• Price momentum (PPO) — steadily picking up over last three months, rapidly during Oct
• Trend (ADX) — very strong
• Money flow (CMF) — neutral after long period of outflow
• Relative strength (RSI) — strong and coming out of over-sold (StochRSI)
• Volume — average daily volume has doubled in last month

I'm a little apprehensive that I've jumped in before NEOL has pulled back enough from the quick upward spurt. The falling buying pressure (+DI) is a yellow flag. On the other hand, the growth in volume is so dramatic that I'm inclined to think/hope that more will follow. It has been given a big boost by "positive Phase I/II data for its brain cancer therapy cintredekin besudotox" (MarketWatch). With pharmaceutical companies, however, news is always the wild card, since it usually precipitates wild price swings.

Sell

3-Nov-06. I got stopped out again. It is clear from the chart that I jumped into NEOL too soon; I'm obviously too willing to believe that a pullback is over. The lesson I learn from all this recent experience is ignoring any indicator that is pointing in the wrong direction is very risky business, indeed.