Sunday, November 15, 2009

Notable Calls Network (NCN): Genzyme (NASDAQ:GENZ)

I think anyone who has been in the game agrees that trading has been extremely tough over the past several weeks. The indices have held up fairly well but the underlying action in single stocks has been very choppy. Most calls or news have very little if any follow-through, so one has had to be very quick to book even the slightest gains.

I know it's tough out there when people who have been trading for 20+ years are complaining. And they certainly have been complaining.

Still, there have been some really bright spots in overall action. For example the Notable Calls Network (NCN) caught a nice move in Genzyme (NASDAQ:GENZ) on Friday November the 13th.

- Right after 11:30 AM ET the shares of Genzyme (GENZ) started plunging with very high volume. I (and I think everyone else as well) knew the plunge had to have something to do with the much-publicized problems at the Allston manufacturing facility but given there was no confirmation there was very little we could do.

So we sat and watched as the stock kept plunging.

- Around 11:45 AM ET, just 15 minutes later I started hearing trading desk chatter of another possible contamination accident at Allston, this time involving several product lines. That sounded pretty bad, given many had hoped the problems with Cerezyme were close to conclusion.

Some minutes later we got confirmation that the FDA has issued a warning letter about the potential for foreign particle contamination of several products manufactured by Genzyme Corporation that are used to treat rare, serious, and life-threatening diseases.

By that time the stock was already down 4 pts so shorting it felt like gamble. The stock however did fall another 1.5 pts to about $48+ level over the next 10 minutes. The selling pressure was that immense, with 300,000-400,000 shares crossing the tape every minute.

- Around 11:53 AM ET a top Notable Calls Network (NCN) member pinged me with the following:

'... From Sanford Bernstein : FDA comments on GENZ: we think over reaction. These drugs are NOT being pulled from the market. Just letting docs know about past issues...'

So there it was, Sanford Bernstein saying the almost 6 pt plunge was based on old & insignificant news. I knew this was the kind of defense that could be bought with size.

Around 11:54 AM ET to 11:55 AM ET I distributed the following to all Notable Call Network (NCN) members:

GENZ - SANFORD BERNSTEIN DEFENDING - we think over reaction. These drugs are NOT being pulled from the market. Just letting docs know about past issues! - (not sure if it's confirmed - fyi)

I added the 'fyi' comment because I had not seen the actual note nor had the NCN member that sent it to me seen it. This usually happens with sales calls as the analyst realizes she does not have the time to write up a full note. So, the sales people are instructed to send out these short messages from the analyst.

I had no reason to doubt the sincerity of the sender as I have been trading alongside this high profile trader for several years.

- As you can see from the chart this represented the low in GENZ stock on Friday. Some 5 minutes later J.P. Morgan came out with a defense, followed by Deutsche Bank about 30 minutes into the bounce.

Depending on one's entry and exit up to 3-3.5 pts worth of gains were to be had from the Sanford Bernstein defend til the stock ran out of gas again after hitting the 51.75 level.

The best thing about it was that this call enabled people to take size! You could have literally bought 100's of thousands of shares and flip them for a tidy intraday profit.

Later we had Goldman Sachs out negative on GENZ (they still have Conviction Sell rating on the stock) and Merrill Lynch downgrading GENZ to Underperform from Buy around 2:10 PM ET. The latter was worth a shot yielding a quick ~0.5 pt profit.

But the main play was definitely the Sanford Bernstein defend at 11:53 AM ET. The risk/reward was there and size was to be had.

This is how Notable Calls Network (NCN) works - sharing the flow. We catch them every day.

Want to be part of NCN?

It's easy. Just shoot me a brief email that includes a short description of yourself and your AOL nickname.

Please do note that contacts via IM are limited to people with:

- 3+ years of trading experience

- Access to quality research/analyst commentary

- Ability to generate and share (intraday) trading calls

I will not accept contacts from purely technically oriented traders, penny stock fans or people who have less than 3 years of experience in the field.

No comments: