NVAX - Sector: Healthcare --- Industry: Biotechnology & Drugs

[LiveLife]

Nice gain for NVAX today.  As RSI rises above 70, look out for profit taking.

[Terliso]

NVAX

[David Randolph]

We know how NVAX is capable of surprising on the upside (a surprise would be a breakout above $6) and then collapse. The way I see this trade evolving is a classic buy the rumor, sell the news thing.

The rumor is pretty well founded, the government has $6.7B to spend on Avian Flu related companies in 2006 and NVAX is very well positioned to get a chunk of that money. It joined a team of highly influential people to lobby Washington to give NVAX some of the money.

Insiders and institutions are buying NVAX, so probably everything is going as planned.

My trading plan is simple: continue to hold until the news is out. Then not only take profits but sell NVAX short. Remember, «buy the rumor, sell the fact».

[LiveLife]

Profit taking today.

[David Randolph]

NVAX went down yesterday because it rose too much on the previous day. Period.

The rumor of massive public funding for this company will certainly continue to fuel the rise, I'll continue with my plan of holding until the news is out.

[David Randolph]

I think there's only one thing moving NVAX now: the expectation of massive public funding for the company to fight the possible Bird Flu Pandemic.

I always said it doesn't matter all that much, at this point and for the share price, if the disease will indeed spread across the globe or not (I hope not), what matters is if people believe it will and what they are going to do about it.

The $6.7B package the US government approved to address this issue (the government wants to make sure there is capacity to make 240 million avian flu vaccines in 6 months - they already assured 60 million, don't worry, if the disease hits America there will be 1 vaccine for every American).

Now I tell you, without this speculation NVAX would probably be worth about $1 to $2.

I'll continue waiting for the news to hit the wires, to then see a big gap up and that's where I'll take profits and possibly, depending on the news and the magnitude of the rise, I'll hit the short button.

One thing we have to know about a buy the rumor, sell the fact type of trade is that the share price should continue going up to keep confirming the rumor. If the rumor is getting traction and close to being news, insiders and others would buy so the stock should go up.

If it doesn't, if it goes down, reality is getting away from the rumor, from the projected news,  so one should sell with whatever profit he has.

So here's my trading plan for NVAX:

1) Sell the fact when there is one;
2) Sell if the stock is set to close below the red ascending trendline on the chart below, which for today stands at $3.85.

[ASR831]

So here's my trading plan for NVAX:

1) Sell the fact when there is one;

Would that be selling even if the news hit during the day?

[David Randolph]

So here's my trading plan for NVAX:

1) Sell the fact when there is one;

Would that be selling even if the news hit during the day?

Good question, the answer is no. If the fact comes out with the session opened the stock will rally until the end of the day and gap up the following session. That's where I'll sell.

[shawFund]

So here's my trading plan for NVAX:

1) Sell the fact when there is one;

Would that be selling even if the news hit during the day?

Good question, the answer is no. If the fact comes out with the session opened the stock will rally until the end of the day and gap up the following session. That's where I'll sell.

That is exactly happened to FORD today (Friday).

[SmartWrasse]

I like the look of this weekly chart.  Of course it likely does not mean much for a stock like NVAX.

[David Randolph]

Now we have $3.78 B in federal funding to prepare for a possible bird flu pandemic:

Congress seeks $3.8 billion for avian flu


«The Senate had wanted $8 billion, and President Bush last month requested $7 billion but faced resistance from fiscal conservatives.»

So, the money isn't as much as it could have been, but still it is a lot of money. The question now is: how much of it will go to NVAX?

I don't know, but NVAX is making important lobbying efforts to get a big chunk:

«Novavax, Inc. has created a new Government Relations Committee of the Board of Directors to assist the company with respect to the development and funding of its on-going avian flu and seasonal flu vaccine programs. John O. Marsh, Jr., former Congressman, Counselor (with Cabinet rank) to President Gerald Ford and Secretary of the Army, is Chairman of the new committee, which is comprised of four members. Through the assistance of the committee and legal counsel and third party consultants retained by the committee, Novavax has met with numerous members of the U.S. House of Representatives and Senate and their staff over the past several weeks.

The purpose of the committee is to monitor legislative and regulatory initiatives and guide management of the company in pursuing research and development funding specifically relating to vaccines as well as the company's other current and future products and product development efforts. The committee also will be responsible, among other things, for assisting management of the company in communicating, working with and educating local, regional and national legislators and regulators on the efforts of, and issues of interest to, Novavax.»

The news I've been talking about isn't the above, that the bill has passed, the news I'm looking for is the exact amount of money that will go to NVAX.

Today that news is closer than it was, though it can be for less money.

I'll continue with my plan of holding until the news is out, or I'll sell if the stock is set to close below the red ascending trendline, which for today stands at $3.9

[domination]

still a lot of action brewing here

[David Randolph]

We have this news on the political front:

Effort to attach drilling to defense bill meets resistance in Senate

The highlight for NVAX is: «Democrats came in for harsh criticism themselves for holding up the defense spending bill, which includes equipment for the troops as well as $29 billion for Hurricane Katrina relief, $3.8 billion to prepare for an avian flu pandemic and $2 billion to help low-income people pay their heating bills.»

The rumor is that a nice chunk of these $3.8 B will go to NVAX. NVAX has a market cap of just $222.47M, so it can be pretty significant.

NVAX looks to be a safe play in a dangerous market. I'll continue with my trading plan:

1) Sell after the news comes out (not on an intraday basis, wait for the next open)
2) Sell if the stock is set to close below the red ascending trendline on the chart below, which for today stands at $4.

[David Randolph]

Oh boy, oh boy, it looks like NVAX is losing its shine. Will it get the money from the government, will it not?

Possibly nobody knows, not even company's insiders. As traders we need to work with and get used to uncertainty. Without uncertainty probably there's no profit opportunity.

The stock has strong short term support at the $3.94-$4.02 area. If it holds this area on close, I'll continue holding (it would be a good thing if insiders defend the $4 level).

In fact, if NVAX is set to close below $4.02 tomorrow (the red ascending trendline) I'll take my profits and move on. What else can I do, but to hope for larger gains and at the same time protect some of my profits?

[Melf Elf]

The stock has strong short term support at the $3.94-$4.02 area. If it holds this area on close, I'll continue holding (it would be a good thing if insiders defend the $4 level).

In fact, if NVAX is set to close below $4.02 tomorrow (the red ascending trendline) I'll take my profits and move on. What else can I do, but to hope for larger gains and at the same time protect some of my profits?

David,

Nice job on NVAX.  Applause.

I show the ascending trendline coming in today, December 21, at 4.1057, basis the linear chart.  Intraday yesterday, NVAX completed a Bullish Gartley at 4.12, and put in a double bottom exactly at 4.10.   I'd like to see yesterday's 4.10 low hold.

I'd especially like to see 3.94 hold, since that looks to be the high of an Elliott Wave 1.  It looks as though this Bullish Gartley was an A-B-C Wave 4 correction, and if it was, the low of Wave 4 shouldn't violate the top of Wave 1, which was 3.94 (the top of the Ascending Triangle).  I'll post the daily chart next.

Here's the Bullish Gartley.  Wave CD equaled Wave AB at 4.12, so that's completed.  This is a good spot for a Wave 5 rally.  We'll see, huh?