$ONVO - A little known Biotech Innovator with COVID Technologies
My first overview of a narrative driven trade that is likewise seeing strong bottoming in technicals. Let's start with the narrative and get all excited before we get into what actually matters, the only truth - price action.
ONVO is a microcap. While I have found myself trading smallcaps/microcaps recently, I honestly did not think I would be writing about them publicly. We have seen increasing amounts of VERY sketchy trading going on in microcaps (ehheeeemmmm $KODK...) and I in no way want a part of this; rather, I want to invest/trade in something that has a strong fundamental/narrative basis and/or technicals that make me want to go long/short.
With that said, ONVO is a biotech; taken from wikipedia "Organovo is an early-stage medical laboratory and research company which designs and develops functional, three dimensional human tissue (also known as 3D bioprinting technology) for medical research and therapeutic applications. Organovo was established in 2007 and is headquartered in San Diego, California. The company uses its internally developed NovoGen MMX Bioprinter for 3D bioprinting." - en.wikipedia.org/wiki/Organovo
Also from the same wikipedia page (why paraphrase when I can quote?) "The company bioprints and markets human tissues as a means of accelerating the preclinical drug testing and discovery process, enabling treatments to be created more quickly and at lower cost, and without immediate risks to living test subjects. Organovo has long-term expectations that this technology could be suitable for surgical therapy and transplantation"
Ok. One of a couple billion biotechs with no revenue and a promising technology. Meh.
But here's what catches my eye and makes me add it... COVID-19. Yes, ONVO is one of a couple million (hey - not billion!) biotechs with COVID-19 technologies. I am a trader and investor. I am not a biotech analyst. In fact, not only am I not a biotech analyst but I am frankly dumb-money here. As a trader, I've been buying virtually anything with COVID exposure as part of my COVID basket of stocks and frankly that's been working. Maybe a bit too simple & stupid for biotech traders but has been working for now and looking for this to continue over the next few months at which point I'll likely re-consider this trade.
NYT article on 3D tissue printing and COVID: www.nytimes.com/2020...-covid-19-tests.html
When that article printed the stock went up about 15%, and then pulled back. While I'm still laying out non-technical points, my final point is ARK's position in ONVO: ark-funds.com/wp-con...TF_ARKK_HOLDINGS.pdf
ARK has ONVO weighted at .18% of its top portfolio ARKK; however, due to the size of ARKK ARK actually owns 20% of the company. While I am dumb money fundamentally in biotechs, ARK is not in my view. So this is partially me putting ONVO in my COVID basket and partially following ARK. Ok let's get to the fun stuff, the technicals.
ONVO appears to be in the first wave after a 5 wave downtrend. Elliott wave is up for debate for me but I find it useful occasionally - if nothing else it's simply another data point I can use. In addition to a potential flip in general direction we are seeing what appears to be a textbook bullish Butterly at the bottom, indicating a technical reversal. Now I am no Elliott wave expert and CERTAINLY no Butterfly expert but it doesn't take a genius to see the pattern as it bottoms below $1. Butterfly is typically used in forex trading which is why I am so hesitant to include it here. If you regularly use Butterfly to trade forex and you've come across this post PLEASE comment your thoughts/views as to my Butterfly theory here. Would love to be shredded to pieces by an experienced forex trader calling my Butterfly anything but a Butterfly.
Finally, the potential for this to catch momentum on it being involved in COVID drug discovery seems huge with the mix of technical and narrative. I am long ONVO shares here and looking to double my position if we get it at the 'D' point in Butterfly - the typical long entry for Butterfly reversal.
ONVO is a microcap. While I have found myself trading smallcaps/microcaps recently, I honestly did not think I would be writing about them publicly. We have seen increasing amounts of VERY sketchy trading going on in microcaps (ehheeeemmmm $KODK...) and I in no way want a part of this; rather, I want to invest/trade in something that has a strong fundamental/narrative basis and/or technicals that make me want to go long/short.
With that said, ONVO is a biotech; taken from wikipedia "Organovo is an early-stage medical laboratory and research company which designs and develops functional, three dimensional human tissue (also known as 3D bioprinting technology) for medical research and therapeutic applications. Organovo was established in 2007 and is headquartered in San Diego, California. The company uses its internally developed NovoGen MMX Bioprinter for 3D bioprinting." - en.wikipedia.org/wiki/Organovo
Also from the same wikipedia page (why paraphrase when I can quote?) "The company bioprints and markets human tissues as a means of accelerating the preclinical drug testing and discovery process, enabling treatments to be created more quickly and at lower cost, and without immediate risks to living test subjects. Organovo has long-term expectations that this technology could be suitable for surgical therapy and transplantation"
Ok. One of a couple billion biotechs with no revenue and a promising technology. Meh.
But here's what catches my eye and makes me add it... COVID-19. Yes, ONVO is one of a couple million (hey - not billion!) biotechs with COVID-19 technologies. I am a trader and investor. I am not a biotech analyst. In fact, not only am I not a biotech analyst but I am frankly dumb-money here. As a trader, I've been buying virtually anything with COVID exposure as part of my COVID basket of stocks and frankly that's been working. Maybe a bit too simple & stupid for biotech traders but has been working for now and looking for this to continue over the next few months at which point I'll likely re-consider this trade.
NYT article on 3D tissue printing and COVID: www.nytimes.com/2020...-covid-19-tests.html
When that article printed the stock went up about 15%, and then pulled back. While I'm still laying out non-technical points, my final point is ARK's position in ONVO: ark-funds.com/wp-con...TF_ARKK_HOLDINGS.pdf
ARK has ONVO weighted at .18% of its top portfolio ARKK; however, due to the size of ARKK ARK actually owns 20% of the company. While I am dumb money fundamentally in biotechs, ARK is not in my view. So this is partially me putting ONVO in my COVID basket and partially following ARK. Ok let's get to the fun stuff, the technicals.
ONVO appears to be in the first wave after a 5 wave downtrend. Elliott wave is up for debate for me but I find it useful occasionally - if nothing else it's simply another data point I can use. In addition to a potential flip in general direction we are seeing what appears to be a textbook bullish Butterly at the bottom, indicating a technical reversal. Now I am no Elliott wave expert and CERTAINLY no Butterfly expert but it doesn't take a genius to see the pattern as it bottoms below $1. Butterfly is typically used in forex trading which is why I am so hesitant to include it here. If you regularly use Butterfly to trade forex and you've come across this post PLEASE comment your thoughts/views as to my Butterfly theory here. Would love to be shredded to pieces by an experienced forex trader calling my Butterfly anything but a Butterfly.
Finally, the potential for this to catch momentum on it being involved in COVID drug discovery seems huge with the mix of technical and narrative. I am long ONVO shares here and looking to double my position if we get it at the 'D' point in Butterfly - the typical long entry for Butterfly reversal.
Comment:
Well this completely nearly perfectly. Long here.