COM,Cardiome Pharma

Back in January, when the stock was around $6, this looked like a speculative buy for a target of around $11. “Speculative” to me means that there is a very low level of confidence in the EW count , and on top of that all smaller pharma companies are inherently unstable by the nature of their business. Anyway, this one did not work. Here are the charts again;

com jul 2o11 1 COM july 2011 2

Typically after the C – wave wedge is complete the stock shoots up rapidly back to the starting point. This did not happen. Instead it kept going down.

One way to “explain” all of this is to change the count in such a way that the correction from the top after the initial, fairly clear ,5-waves up, to an a-b-c X a-b-c (a double zig-zag). It still signifies an A-B-C correction, except the structure is different. It would require one more low at about $3 and up from there.

Alternatively the original count could still be correct and once this decline in a wave 2 is over the climb up will continue. This view is contradicted by the fact that the rise should have been very rapid which it is not.

PGE Pfizer, COM Cardiome Pharma.

PFE 2011 big

It took ten years to go from $3 to $50. Then it took  ten years to lose 76% (a Fibo#) of that. PFE was in good company during this slide as many other large pharma (specifically Merck MRK) companies did exactly the same. See previous comments, but it now looks like we have a breakout that may signal a change in fortunes. Yes Lipitor is going generic soon but they also acquired Wyeth not too long ago. The population is aging and the stock has a dividend yield of 4.4% and a reasonable P/E ratio. In my opinion this stock has a very reasonable asymmetric risk/reward profile.

com 2011 

Cardiome Pharma Corp. lost just as much in less than half the time. It also operates in the vascular space. It is relatively small and accordingly the risks are substantially higher. But there appears to be a very intriguing pattern (expanding wedge) that could imply that the stock will shoot up to $11/$15 soon. A speculative buy at about $6.