Spectrum Pharmeceuticals Technicals

[cbryant1990]

Things got a little dicey out there today for SPPI. First we had a sell off followed by a large run that had all the earmarks of a head fake. This was followed by continual pounding by the shorts all day long. Every time the pattern got bullish, the shorts came in and knocked it down. It seems to me that they sensed the lack of conviction of SPPI buyers. But, I have to say, SPPI buyers hung in there pretty tough. It's a war. The battle was lost today, but I for one was pretty impressed with the troops.

So how about tomorrow? After today’s aftermarket earnings reports, I think the shorts will turn their sights to bigger fish like Amazon, Microsoft, and American Express. Add to that the negative reports on Fast Money and "Cramer", the fact that it's Friday, and tomorrow's sell-off may equal or exceed today’s gains. I usually do not advocate selling short, but a brief short position in the morning may pay off handsomely. I'm considering it myself as a hedge.

OK. If tomorrow is going to be a tough day, let’s look at the technical’s for SPPI and see where things may go so we don't panic. On June 30th we hit a high of $7.60. We retraced to $4.94 on July 14th. These are our Fibonacci endpoints. Two days ago we closed right on the 61.8% retracement. By the way, when I say 61.8% retracement, I mean we are up 61.8% from the $4.94 low. Today we closed exactly on the 50% retracement at $6.33. The next leg down is the 38.2% retracement which is $6.00. I'm still comfortable here since I last entered at $5.00. That means if we land there tomorrow, I'm still up 38%. Not bad. If you entered higher, at least you know where these levels are and won't panic if they get there. They offer natural resistance.

I expect that the possibility exists that the stock will open very near the 38.2% retracement or $6.00. Don't panic. If the shorts pound it really hard in the morning, they will not get past the 23.6% retracement which is $5.61. This is the time to buy or cover your short position.

Now let’s look at the fundamentals. Why should longs keep holding SPPI stock? The first approval for Zevalin did not move the stock price because it was limited to use as a last resort. Think about it. After months or years of treatment, failures to respond, lost hope, depleted bank accounts, and increasing age, the families gave up. Oncologist were powerless to prescribe Zevalin as a consolidation treatment even though they knew that it would greatly increase their patients chances for a partial or complete response. With this upcoming FDA approval, oncologists will be thrilled to tell their patients that their absolute best chance for survival will be to follow up their Rituximab, cyclophosphamide,doxorubicin (hydroxydoxorubicin), Oncovin® (vincristine), prednisone (CHOP) therapy with Zevalin to increase their chances of survival by 30%.

The prospective population of Non Hodgkin's Lymphoma patients that could benefit from Zevalin is roughly 18,000. Let’s reduce that population by a third because their peak age is in the mid 70's, and they may not be interested. That leaves 12,000 patients that are really interested. Let’s say that in the next year only 6,000 are prescribed due to lack of knowledge. Now, Zevalin sells for $24K. Each patient represents a $15K net profit to the company. That adds $90M to Spectrum's bottom line in the next 12 months. Divide that by the number of outstanding shares, 38 million, and we have a possible EPS of $2.36.

But wait! That not all, as Billy Mays used to say (God rest his soul). Let’s not forget the research and development costs for SPPI's other trials. Let's subtract 30% of the company's profits for R&D. That leaves SPPI with a conservative EPS of $1.65. Throw on a factor of ten to arrive at a realistic stock price of $16.50 by say April or May next year.

Remember to protect yourself at all times. Ready Bulls? Ready Bears? Let's Fight!

CAB

[maritska]

Hi, I'm a very newbee on this line of "work" and my 3rd pick was SPPI.
I got in at 5,24 but did not read the right stuff and sold just before it went really up! I sold at 5,90.
Just the same with Somaxon so the only good thing that has come of it is that I seem to pick the right stocks, just have to learn to hold my horses.
My question is: shoul I get in SPPI again for the long run or do you think it's to tricky for a newbee like me? I'm not in for a lot at the moment with PPHM but I can sell and get in SPPI again. I'm a dutch woman and try to understand what you've been writing but I will have to read it more times to really get it I think.

[cbryant1990]

Spectrum Pharmaceuticals closed today exactly on the 61.8% Fibonacci retracement today ($6.63). This is a significant point to close at or above. With a strong push upwards, there is nothing standing in the way between $6.62 and $7.65 which is the high point of the retracement series. There are of course the natural $7.00 and $7.50 levels, but these are generally weaker levels of resistance than the Fibonacci levels. In addition, if SPPI pushes higher it may create a panic. Short interests increased from 1.5M shares to 4.7M shares as of July 27. It's not unconceivable to see a short squeeze like we had in JAZZ today. The difference is that shorts held 25% of the float in JAZZ whereas SPPI shorts hold 14% of the float. I have read a few comments that suggest that my technical analysis has no basis in fact. I can understand how some may feel that way, but for those of you with some technical leanings, please check out the graph that I have included which clearly shows the levels of my last post and this(see link below). I have already covered what might happen if the stock drops in my last post, this is the rest of the story describing the possible rise. I have to say, anyone that is short SPPI at this point should seriously consider abandoning their position if SPPI closes significantly above the $6.63 level tomorrow.

Good Luck. CAB
Position: long SPPI

Picasa Web Albums - c.a.bryant1990

[bulldurham]

does anybody have any opinions on the technicals of sppi now?

[bongbabu]

SPPI seems to have a strong support at the 50MA weekly chart. Looking strong now.

[nono704]

Sppi

Has nice option premiums approaching 100% returns on a yearly basis. I am presently looking at the feb. 5 covered calls.

Things got a little dicey out there today for SPPI. First we had a sell off followed by a large run that had all the earmarks of a head fake. This was followed by continual pounding by the shorts all day long. Every time the pattern got bullish, the shorts came in and knocked it down. It seems to me that they sensed the lack of conviction of SPPI buyers. But, I have to say, SPPI buyers hung in there pretty tough. It's a war. The battle was lost today, but I for one was pretty impressed with the troops.

So how about tomorrow? After today’s aftermarket earnings reports, I think the shorts will turn their sights to bigger fish like Amazon, Microsoft, and American Express. Add to that the negative reports on Fast Money and "Cramer", the fact that it's Friday, and tomorrow's sell-off may equal or exceed today’s gains. I usually do not advocate selling short, but a brief short position in the morning may pay off handsomely. I'm considering it myself as a hedge.

OK. If tomorrow is going to be a tough day, let’s look at the technical’s for SPPI and see where things may go so we don't panic. On June 30th we hit a high of $7.60. We retraced to $4.94 on July 14th. These are our Fibonacci endpoints. Two days ago we closed right on the 61.8% retracement. By the way, when I say 61.8% retracement, I mean we are up 61.8% from the $4.94 low. Today we closed exactly on the 50% retracement at $6.33. The next leg down is the 38.2% retracement which is $6.00. I'm still comfortable here since I last entered at $5.00. That means if we land there tomorrow, I'm still up 38%. Not bad. If you entered higher, at least you know where these levels are and won't panic if they get there. They offer natural resistance.

I expect that the possibility exists that the stock will open very near the 38.2% retracement or $6.00. Don't panic. If the shorts pound it really hard in the morning, they will not get past the 23.6% retracement which is $5.61. This is the time to buy or cover your short position.

Now let’s look at the fundamentals. Why should longs keep holding SPPI stock? The first approval for Zevalin did not move the stock price because it was limited to use as a last resort. Think about it. After months or years of treatment, failures to respond, lost hope, depleted bank accounts, and increasing age, the families gave up. Oncologist were powerless to prescribe Zevalin as a consolidation treatment even though they knew that it would greatly increase their patients chances for a partial or complete response. With this upcoming FDA approval, oncologists will be thrilled to tell their patients that their absolute best chance for survival will be to follow up their Rituximab, cyclophosphamide,doxorubicin (hydroxydoxorubicin), Oncovin® (vincristine), prednisone (CHOP) therapy with Zevalin to increase their chances of survival by 30%.

The prospective population of Non Hodgkin's Lymphoma patients that could benefit from Zevalin is roughly 18,000. Let’s reduce that population by a third because their peak age is in the mid 70's, and they may not be interested. That leaves 12,000 patients that are really interested. Let’s say that in the next year only 6,000 are prescribed due to lack of knowledge. Now, Zevalin sells for $24K. Each patient represents a $15K net profit to the company. That adds $90M to Spectrum's bottom line in the next 12 months. Divide that by the number of outstanding shares, 38 million, and we have a possible EPS of $2.36.

But wait! That not all, as Billy Mays used to say (God rest his soul). Let’s not forget the research and development costs for SPPI's other trials. Let's subtract 30% of the company's profits for R&D. That leaves SPPI with a conservative EPS of $1.65. Throw on a factor of ten to arrive at a realistic stock price of $16.50 by say April or May next year.

Remember to protect yourself at all times. Ready Bulls? Ready Bears? Let's Fight!

CAB

[jfpo222]

does anybody have any opinions on the technicals of sppi now?

It appears to have found support and setting itself up for a move upward. The RSI is close to oversold and the MACD will form a bullish cross if a positive move is made.