Registered User
Joined: 3/21/2005
Posts: 2
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Please comment on RHEO (Occulogix). Good MS, TSV, and BOP. Bought at about 9, gapped up and consolidated at 12, then....dropped 65% down to 4 today. OUCH! How does one avoid such wild swings in a stock that looked like it had great potential. I certainly didn't see any signs of weakness here. What happened?
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Administration
Joined: 9/30/2004
Posts: 9,187
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Down on news.
TORONTO, ONTARIO, Feb 3, 2006 (CCNMatthews via COMTEX) --
OccuLogix, Inc. (NASDAQ:RHEO)(TSX:RHE) has completed a preliminary analysis of the data from MIRA-1, its recently completed pivotal (phase III) clinical trial using its RHEO(TM) System to treat the dry form of age-related macular degeneration ("Dry AMD").
MIRA-1 did not demonstrate a statistically significant difference in the mean change of Best Spectacle-Corrected Visual Acuity applying the Early Treatment Diabetic Retinopathy Scale ("ETDRS BCVA") between the treated and placebo groups at 12-months post-baseline. As expected, the treated group demonstrated a positive response. An anomalous response of the control group is the principal reason that the primary efficacy endpoint was not met.There were subgroups that did demonstrate statistical significance in their mean change of ETDRS BCVA versus control. Further analysis of the study data is being undertaken.There is a large patient population suffering from Dry AMD, with limited therapies available to treat this devastating disease. The Company is in the process of evaluating the implications of the MIRA-1 study data on its application to the U.S. Food and Drug Administration for approval to market its RHEO(TM) System in the United States. OccuLogix will provide further updates as they become available.About OccuLogix, Inc.OccuLogix is a health care company that brings innovative and evidenced-based medical therapies to market. OccuLogix's common shares trade on the NASDAQ National Market under the symbol 'RHEO' and on the Toronto Stock Exchange under the symbol 'RHE'.
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Registered User
Joined: 12/19/2004
Posts: 457
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Technical analysis is less effective on biotech stocks due to price shocks like this.
Now, I'm NOT saying TA is absolutely useless. But for an individual pick in the biotech sector, you have to know a little bit about the company, or if you don't want to take the time for that, trade for very short time periods.
A better use of TA would be to analyze a sector fund that tracks biotechs.
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Registered User
Joined: 12/8/2004
Posts: 1,301
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QUOTE (rmr1976) Technical analysis is less effective on biotech stocks due to price shocks like this.
Now, I'm NOT saying TA is absolutely useless. But for an individual pick in the biotech sector, you have to know a little bit about the company, or if you don't want to take the time for that, trade for very short time periods.
A better use of TA would be to analyze a sector fund that tracks biotechs.
I agree totally. If you are going to invest in biotech, keep your stops close. Even when you do your research you have to be careful on anything that they have in the pipeline that is not approved yet. Biotech stocks reflect the "promise" of what is in the pipeline. They get killed when something gets thrown out of that pipeline.
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Registered User
Joined: 12/2/2004
Posts: 1,775
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Agree with all, TA can get shot out of water too easily with bio/medical stocks; they are indeed the ones most likely imo to be most susceptible to news shocks, good or bad. Remedy is simple, keep position size in bio and medical plays smaller than your other holdings.
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Registered User
Joined: 10/7/2004
Posts: 2,126
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Gurus, this happens lot more often that most folks would think. There almost nothing you can do against this kind of pitfall. Stops do not work in this kind of situation no matter how close or loose you set them.
The only thing you can do to protect yourself from this kind of situation, is what daytraders do. You close all your positions before market close. Other than that there is nothing else. And one more thing it is obviously news related, so next time search for earnings due, or clinical test due, or anything that could strongly set the direction of the stock; it is also important to find out the time when those reports will be given. It is good to stay out of the stock, if you are not a risk taker. Like I said many times, you get pay for taking risk. Just think that if the news had been very positive you would have been sitting on a hot rocket perhaps. It is the nature of the market.
good luck.
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Registered User
Joined: 5/17/2005
Posts: 221
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I trade boitechs .... been doing well in GNTA .. but as Bigblock says I only daytrade this stock. Biotechs are a traders worst nightmare ..specially the cheaper priced ones.
However thanks for pointing this one out as now it looks like a greatday trading candidate .. very over sold on the hourly and daily charts ...damn I am just a vulture going for the pickings !
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 Gold Customer
Joined: 2/1/2005
Posts: 51
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I am in full agreement with closing your position in biotech stocks by the end of the day. Overnight stop losses are worthless, when the stock opens 18% below your stop and than activates.
Look at ALXN for late November 05, I was caught and I have found religion in daytrading any biotech. I wish I had options, fortunately, now available with IRA's at IB.
Unfortunately, the above will not stop stock manipulation by insiders, a good example is ILSE on 1/26/06. best way to buy cheap is to dump at premarket, and buy back.
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Registered User
Joined: 12/31/2004
Posts: 382
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I bet cammer feels very bad too.
Today's Health Winners and Losers
By Mark Martinez
TheStreet.com Staff Reporter
2/3/2006 3:31 PM EST
Shares of OccuLogix (RHEO:Nasdaq - commentary - research - Cramer's Take) were among the worst-performing health-related stocks Friday, tumbling 67% after the company said its treatment for age-related blindness failed to meet its primary endpoint in a phase III clinical trial.
Shares of TLC Vision (TLCV:Nasdaq - commentary - research - Cramer's Take), which owns 51% of OccuLogix, were also down Friday, falling some 25%. OccuLogix said its treatment system for the dry form of age-related macular degeneration didn't demonstrate a statistically significant difference compared to the placebo group. "An anomalous response of the control group," the company said, "is the principal reason that the primary efficacy endpoint was not met." Shares of OccuLogix were trading down $8.56 to $4.19, while shares of TLC Vision declined $2 to $5.93.
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Registered User
Joined: 3/11/2005
Posts: 16
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this was a cramer stock which just kept on going up after he said to buy.
Cramer said to buy based on the prospects of a new "procedure" to cure eye blindness. The stock crashed because studieies showed no promise.
I almost bought the stock due to MS and TSV but resisted because it's fundamentals were a gamble.
However, Cramers as a whole makes alot of great stock tips. I buy quite often despite the intial price increases.
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Registered User
Joined: 7/12/2005
Posts: 1
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QUOTE (Gurus1Son) Please comment on RHEO (Occulogix). Good MS, TSV, and BOP. Bought at about 9, gapped up and consolidated at 12, then....dropped 65% down to 4 today. OUCH! How does one avoid such wild swings in a stock that looked like it had great potential. I certainly didn't see any signs of weakness here. What happened?
In hindsight, here's what I see with my indicators:
Caution: I am not an expert!
1/13/06 Price up 45.80% this week.
1/17/06 RSI (14) entering overbought territory and price dropped 3.71%.
1/26/06 The 7 day simple moving average is beginning to flatten out.
1/27/06 Price dropped 4.66% on higher volume.
1/27/06 ADX (14) is beginning to show an end to the trend.
1/31/06 MACD (10,20,10) crossed the zero line down.
1/31/06 BOP was beginning to decline.
1/31/06 TSV (14) in a decline.
Chuck
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