XOMA - Sector: Healthcare - Industry: Biotechnology & Drugs

[bula]

Excellent chart, consolodation at higher levels.  OBV way up.  Looks ready for a serious move.  Opinions?

[bebu]

There is a buyout rumor & u can look at the volume last few days.

[eliteG]

that Full STO is negatively diverging with price...be cautious

[bula]

Actually the fast Stoch is crossing back over the slow and gaining strength.  Stoch showed the momo traders overbought this, but it price and stoch both retraced nicely yet the OBV remained very strong.  Bullish signs I think.

[eliteG]

this is what I see...negative divergence

[eliteG]

this doesnt make a long trade bad.. nothing in the markets is 100%... but just wanted to point it out to you 

[eliteG]

also...

[bula]

I want to learn more about your comment.  I would think this situation happens a lot with stocks, especially small caps that get daytrader runs even when technically they are legitimately showing strength.  In your opinion, if a stock is continuously hitting higher highs and higher lows yet has a full stoch that peaks into overbought territory (like XOMA did), you consider this a higher probability of a top than continued momentum?   For example, a run happens, traders hop on, the full stoch flies over 80.  Doesn't it seem likely that this "divergence" or "head and shoulders" is likely - and a bit bogus technically?  How do you discriminate and objectively determine if the run is legit and not a top when this excess trading happens?  (hopefully you understood my question)

[eliteG]

I want to learn more about your comment. I would think this situation happens a lot with stocks, especially small caps that get daytrader runs even when technically they are legitimately showing strength. In your opinion, if a stock is continuously hitting higher highs and higher lows yet has a full stoch that peaks into overbought territory (like XOMA did), you consider this a higher probability of a top than continued momentum? For example, a run happens, traders hop on, the full stoch flies over 80. Doesn't it seem likely that this "divergence" or "head and shoulders" is likely - and a bit bogus technically? How do you discriminate and objectively determine if the run is legit and not a top when this excess trading happens? (hopefully you understood my question)

first off you must understand that price and volume do not lie.
indicators are a derivative, so you must always be careful.

now to answer your questions:

if a stock is continuously hitting higher highs and higher lows yet has a full stoch that peaks into overbought territory (like XOMA did), you consider this a higher probability of a top than continued momentum?

absolutely not.  the divergence is the key.  the peaks and the valleys and how they match with price's highs and lows...many times a stock will stay in overbought territory.  that is because the stochastic is an oscillator and better used on a ranged stocks and not on trending positions.

For example, a run happens, traders hop on, the full stoch flies over 80. Doesn't it seem likely that this "divergence" or "head and shoulders" is likely - and a bit bogus technically?

just bring up a bunch of charts and look for divergences... they dont always work but a high percentage do.  I dont use the fullSTO for my divergence trading but I noticed it and wanted to point it out

How do you discriminate and objectively determine if the run is legit and not a top when this excess trading happens?

easily...volume increases...strong candles...support held

[bula]

Just hit another hod.  This one is on fire.  Next week may be huge if we can clear $2 again.

[eliteG]

its got a heavy bid there...interesting but it needs some dramatic volume to get over that resistance and 200ema... wish you luck though.

[Michael]

Doesn't it worry you that XOMA has just completed a $60.0 million convertible senior note financing to qualified institutional buyers. The notes, which mature in 2012, are convertible into XOMA common shares at a price of approximately $1.87 per share. Not only can they be converted into 32 million shares but would the management have accept the conversion rate if they considered the company to be worth signifcant more?

IMHO the management seems to lack confidence in the company (COO sold 11K at 1.39 - 1.43 in May). If they don't believe in the company why should we?

Mike

[bula]

You don't sound like a trader - more like an investor which can get you into real trouble in a small cap trading room like this.   Believe me, stocks posted here are for short term swings, not buy and holds.  Your concerns may be valid especially for any stock trading at under $2.  But in reality, for short term movements, follow the momentum not the iffy fundamentals.   

Following the chart (and only the chart) I was able to buy in at 1.60 Thursday and sell at the close at $1.95 - a $16,000 gain in about 30 hours.  I only sold Friday to protect cash, as most traders do.  Monday morning, if momo continues I buy back in.

Trade it, don't marry it.

Bula

[Michael]

I guess you are right. I would never buy a stock based only on the chart. On the other hand I would never by a stock on fundamentals if it wasn't supported by the chart.

That is why I like GIGM and BNT. I guess I am quite hard to please 

[stocky]

Traders, Investor all are welcome here. I am myself part trader/ part investor. Ppl do have different styles. Also some ppl do have different time frames for a percentage of portfolio. Few pros that I know, keep even completely different accounts for the purpose. However, its true that most of us are here for qucik buck. Some picks are though suitable for only medium to long term holders.