From a short-term perspective, as a daily trader it is easy to notice why Vivus has a lot of upside possibilities. A textbook Cup and Handle pattern is on the verge of forming (Dec.6.2010 – daily chart), where a breakout above $7.10 could lead to an easy pop towards $7.25.

The bollinger bands was also tested at the top, which resulted in the stock pulling back slightly, and now it seems ready to make another move higher.

Relative Strength Index (RSI) also looks extremely bullish, having reached the bottom as it touched the 30 mark, and is now beginning to trend up as it moves towards a bullish cross.

Technical divergences can persist for weeks before fulfilling their downside potential. That would give enough time for a sharp, quick wave v which would then be followed by a reversal.

The other news of the day is a better than 1% drop in the EuroDollar. Other components of the Dollar Index are fairly flat. The drop in the Euro may have something to do with persistent news on Greek and Irish debt. There may be a “European Debt Crisis” shakeout soon.

The selling in Euro in conjunction with a European debt scare should shake out metals, commodities and stocks and create a buying opp just in time for the ECB to pull off some kind of QE3 of their own to bail out the situation. At which point asset prices will surge again.

This is pure speculation, of course. But the action in the Euro is curious and has been wonky for a couple of weeks now. It’s one of the things that have made me question some of the inflationist assumptions that are ingrained in the markets now. In my opinion should the above scenario come to pass we should not panic out of longer term positions but should be ready to buy FAST as soon as we see an abc correction to support.

There is some chance of a short term top in asset prices and a short term bottom in the dollar.

Tonight there is general weakness in Asia and in commodities while the dollar has strengthened. There is no real “reason” for it, though I suspect that some kind of European sovereign debt jitters are brewing. The Euro has broken down out of the rising wedge indicated in the last update:

If this is an early warning of a debt crisis shakeout then I say “great”! The bears will think it’s “The Top”, the “D” word will once again be spoken in fear, the ECB will print tons of cash, bailout whatever needs to be bailed out and then things will rocket back up to new highs. That is likely to be the pattern over and over again…crisis, fear, mini panic, bailout, rally, new highs.

We have seen many markets break to the upside of rising wedges and channels, an unusual technical occurrence, very bullish IF IT STICKS. If these markets fail back through their patterns and fail badly then that is very bearish. My guess is we see some support retested and then new highs.

Indeed we have seen Euro weakness and dollar strength as sovereign debt concerns regarding Ireland and Portugal have grown. There was no real news to spark today’s selling, which is a little more bearish in that the selling was organic and not news driven. I think that there are indications in the technicals which may point to an intermediate term top and a pullback. I can’t advocate putting any new money to work nor can I say that we should be shorting. The best we can do is continue to ride existing long positions and wait for the correction.

The move off of the QE2 announcement started out like a wave 3 move but has since stalled and the technicals have not really shown the kind of internal strength that would be associated with a wave 3. I’m looking at the recent highs as probably a wave 5 off the August bottom. In that context I am looking for an intermediate term pullback to start anytime now.

The Euro has indeed broken down out of an abcde rising wedge (possible leading diagonal) pattern. I think it’s got more downside to at least the 38.2% Fib retracement of the recent rally.

General asset price direction is tied to the fate of the EuroDollar at this time, with markets tethered to the dollar inflation trade and subject to a bout of fear as questions surrounding Portugal and Ireland mount.

Tonight Cisco announced earnings and the market did not like the results or the guidance. CSCO fell by 12%. Nasdaq 100 futures appear to have broken key support.

The uptrend from the August bottom is gone and we have an upside wedge breakout that has failed back through the formation, a particularly bearish occurrence. If this move holds and we sell down on Thursday then we probably have the beginnings of an intermediate term decline.

In early October, Stocks Above the 50 Day EMA topped out at levels frequently associated with a market high. Recently, the indicator has apparently made a lower high even as the market has moved up creating a divergence.

The McClellan Oscillator is showing a divergence similar to those shown at the January and April tops.

The white boxes show an area of lengthy consolidation in the vicinity of the 0 line after which the indicator breaks down with the market.

Traders should be taking some money off the table here and gearing up to buy after an abc decline. It could last about 1-2 weeks, maybe less. The spark could be any bit of news from Europe. I would not recommend shorting because the decline could be very short lived or it may not even materialize at all. Again, the setup is for a pullback within the context of a wave 3 bull move, not a major top.

The report issued on Wednesday (November 10) seems to have been borne out by market action. The current situation is pregnant with precarious possibilities including a renewed European debt crisis, a US mortgage debt crisis and a US Municipal bond crisis. Any of these could cause a deeper retrenchment in risk assets followed by the customary money printing and bailout leading to a reflation of asset prices.

So far we have a decline to the 20 EMA on SPX, which has contained pullbacks throughout the recent rise. RSI appears to have rolled over and other indicators lead me to believe that we will see SPX test the 50 EMA as a minimum target on this decline.

The short term chart shows the trend channel break on Friday with a weak intraday retest of the break. The chart shows a potential trajectory for the ABC correction.

I have reduced my long exposure to 25% because I think there is too much risk to the downside at the moment. We do need to keep in mind that we probably are somewhere in a Wave 3 up and we don’t want to be caught out of position when the market turns back up because it will probably happen fast and hard.

My current view is that we have seen the first wave down of an intermediate term correction in risk assets. I am using the June 2009 correction as a sort of template. No two corrections are the same but it helps to have a point of reference. B wave up is apparently in progress as overnight we are seeing substantial strength in Asian trade and US futures with commodities recovering and the dollar selling off.

So far there are no signs from the Treasuries-EuroDollar spread (TED) that anything substantial is happening in Europe. No doubt the Euro Fiat Helicopters are being loaded with cash tonight and will commence a bombing run on the green fields of Ireland very soon.

The short term chart of SPX shows a completed A wave down. B wave up should begin now.

NYSE and Dow Jones indices touched their 50 Day EMAs today. B waves frequently start from there.

Traders should be gathering their capital and preparing for one of the best buying opportunities we are likely to get for a long time. While there is (technically) still some chance for a bearish resolution, overall the signs do not point in that direction at this time. I’ll be keeping one eye on it, of course. More likely, as Wave 3 of (3) unfolds the ingrained, long term bearishness of 10 years will be unwound and it will be very, very, very difficult to get on board as the buying panic proceeds. People get ready!

The action sure has been quite choppy and random of late, which is typical of a triangle correction. Here’s a view of what a triangle might look like:

I don’t think that this is a wave 4 off the July SPX 1010 bottom, but rather a correction of a lesser degree within a larger wave 3 up (ii of 3). If the correction ends up being a flat (looking less likely today) then we would have alternation between the August correction and the present one and that would suggest a wave 4. We’ll also have to look at the indicators to see if they give clues as to the degree of the correction. For now I’m seeing it as a correction of the move off the September bottom and looking for a iii of 3 of (3) setup at the bottom.

Overnight markets are bouncing smartly without any news catalysts. Investors appear to be buying the fear dip. Based on chart, technicals, tape action and resilience of the markets I am tending away from looking for a sharp C wave down and tending now to look for either a triangle correction or an expanded flat correction.

The triangle would probably mean that the price bottom is already in and it’s just a matter of time for the formation to complete. It would probably take about another week, maybe less. Here’s a potential view of how it might develop:

I’m very close to shifting to a general BUY signal. There are growing indications that the wave ii correction of SPX wave i of 3 of (3) up is complete. Here’s a chart of NYSE to give you a sense of where we may be in the market:

Potentially we are at a point where wave 3 impulsive characteristics will assert themselves on multiple time frames simultaneously. It could be a very powerful recipe. It may have begun today.

The short term chart shows an exceptionally choppy decline with an even more choppy wave i and wave ii off the bottom. My tape reading suggests that buyers were taking advantage of any dip at all to load up on stocks.

Late last night stocks and commodities were bouncing sharply and the dollar was selling off. Then S&P announced that they were cutting Ireland’s credit rating (gee thanks S&P, but I’m pretty sure bondholders wanted to know that BEFORE the Irish sovereign debt market tanked). Markets gave up all their gains and went into the red within minutes. Then the dip buyers came in and markets rallied all through the night and into the NY close. Fear dip buying is bullish tape action.

Many sectors have already taken out or matched their recent November highs and April highs. Semiconductors in particular are on a tear. Many economically sensitive sectors are outperforming the broad market (SPX). This list is by no means exhaustive.

The bounce off the low has been a bit of an uneven, “stealth” bounce so it may not feel like a firm bottom is in place yet. But this is probably a minor ii correction within the context of a much larger wave. I am buying here but I would not suggest throwing all your available capital into a single leveraged position in one shot. In other words, don’t bet the farm. There is still risk and anything can happen over the weekend. I do think some nibbling on any dips with a small portion of available capital is prudent at this time.

The EU has bailed out Ireland (as they promised to do last weekend). The markets initially rallied on the news, then sold off and have now bounced back smartly. The US Dollar is essentially flat. The tape action continues to be more suggestive of a bottoming process rather than a breakdown. The end of the correction may be in progress and today’s trade may very well mark the bottom.

The NYSE may have completed an ABC correction with a shallow C wave.

The chart of the SPX futures contract shows an apparent complete abcde corrective triangle with a partial e wave. A break above the trendline could come as soon as Monday, confirming the formation and the bottom.

Many sectors of the market have already matched or exceeded their recent highs and April highs. This shows some underlying strength in the face of the recent correction and the fears of a debt collapse.

If this European debt thing is such a big deal then why is the stock market of the continent’s biggest economy trading at its highs and apparently set to break out?

World Dow Index has apparently completed a five wave triangle correction with a successful test of the 50 EMA.

The likelihood is that an intermediate term bottom in stocks is in place and new highs will be seen soon. If so then we will have confirmation that we are in a Wave 3 move. In this move we want to establish and hold our positions tenaciously (like Old Turkey) since entry points will be difficult and scarce. If we were at a bearish C wave high and about to begin a Wave 3 down, as many believe, then this would be the time for it. The market has refused to comply and the technicals show little sign that it will. Tape action is resiliently bullish showing that bulls are anxious to buy this and any dip.

Chances are pretty good that we have seen a bottom to the correction here. I am long SPX from 1183. If the market closes today near its lows then I will stop this position out. If it closes below 1172 tomorrow then I will need to assume a deeper c wave is in progress and would close the position at a small loss.

Picture perfect textbook triangle correction pattern now complete. All that remains is a breakout above the upper rail of the formation.

Big move in futures worldwide. SPX short term downtrend broken.

It appears that I have once again nailed a major turn in the market. As long as the market closes above 1190 we can buy or add to our long position.

Of course it’s not how they open but how they close that matters and anything can happen before the end of the day. But the setup and the technicals tend to indicate that this is the start of a big move.

Huge breakout to initiate Wave 3 move.

12/01/10 BULLBEAR TRADING UPDATE 3:

So far indications are that the rally that began two days ago with a retest of the 1173 low is the bottom for the correction. There is some chance that we are beginning a B wave up and there will be a final C wave down to complete the correction. But the triangle formation and the fact that it took two weeks of basing activity to complete tends to suggest strongly that we have a completed correction of the move off the September bottom. Unfortunately we do not have a lot of corroboration from the technical indicators yet. We did see SPX test the 50 EMA three times and each time it held quite well. We also have a major breakout on the daily and monthly charts of the SPX/30 Year Treasury ratio which STRONGLY suggests an important bullish event is underway.

This move, particularly on the monthly chart, is enormously significant and really suggests we are in an important Wave 3 phase.

Please note that the assembled excerpts contain only a fraction of the charts and analysis delivered during that time period. As I analyze I am developing the thread of a primary scenario while simultaneously proposing alternative Bull and Bear scenarios.

Our latest articles about OREX and ALXA were very successful calls, we would like now to introduce you this amazing company.

Delcath is a development stage specialty pharmaceutical and medical device company focused on oncology. Delcath is developing a proprietary system for Chemosaturation Therapy that is designed to administer high doses of chemotherapeutic agents to a diseased organ or a region of the body while protecting the patient from potential systemic side effects.

The Chemosaturation Therapy system is designed to be a repeatable, minimally invasive procedure that isolates the blood flow of the targeted organ, saturates the isolated organ with therapeutic agent, and then filters out toxic levels of the drug before returning it to the patient.

The company has an intellectual property portfolio consisting of 28 patents worldwide.

About the Technology

Delcath has a Cooperative Research and Development Agreement with the National Cancer Institute and has received Fast Track and a Special Protocol Assessment from the Food and Drug Administration for its use of melphalan in treating unresectable liver tumors. PHP, also known as the Delcath System, is tested for the treatment of metastatic melanoma in the liver and for primary liver cancer and metastatic hepatic malignancies from neuroendocrine cancers and adenocarcinomas, as well as patients with melanoma who previously received isolated perfusion.

The Delcath System for Chemosaturation Therapy currently under investigation includes both the chemotherapeutic agent – melphalan hydrochloride – and a delivery system that allows the clinician to perform the three key phases of Chemosaturation Therapy via a Percutaneous Hepatic Perfusion (PHP) procedure:

1. Isolation

The Delcath Isolation-Aspiration catheter is inserted through the femoral vein and guided into the inferior vena cava and positioned so that when the balloons on the catheter are inflated they isolate the normal hepatic outflow of blood from the patient’s general circulatory system.

2. Saturation

The chemotherapeutic agent is delivered directly to the liver by a specialized chemo delivery catheter placed in the hepatic artery. In this procedure the chemotherapeutic agent is administered at dose levels several times higher than the currently approved limit of traditional systemic chemotherapy delivered via a standard IV infusion.

3. Filtration

The chemo saturated blood is filtered by an extracorporeal filtration circuit that uses a proprietary plasma cleansing technology to reduce toxic levels of the drug before returning it to the patient.

Now what is very interesting and promising with this technology is that Delcath system is a platform technology that may have broader applications in other organs and regions of the body using a wide variety of therapeutic agents. They are continuing their research and development efforts with respect to other therapies.

About the Phase III study

In April 21, 2010, Delcath Systems announced that its Phase III National Cancer Institute (NCI)-led multi-center clinical trial has successfully met the study’s primary endpoint of extended hepatic progression-free survival (hPFS) in patients with melanoma metastases to the liver based on an independently corroborated intent-to-treat analysis.

The Phase III study result was also highlighted at ASCO 2010. Chemosaturation Therapy via Percutaneous Hepatic Perfusion Shows a Substantial Increase in Median Hepatic Progression-free Survival Compared to Control Arm for Patients with Hepatic Metastases from Melanoma.

In the PHP arm of the study, patients showed median hepatic progression free survival (hPFS) of 245 days compared to 49 days in the BAC arm, a 5x extension of hPFS. Median overall survival in the PHP arm was 298 days, compared to median overall survival of 124 days for those patients in the BAC arm that did not crossover.

The hepatic response rate in the PHP arm was 34.1% compared to 2% for the BAC arm and 22.2% for patients who crossed-over to receive PHP upon progression of their tumors. 52.3% of patients in the PHP arm achieved stable disease, compared with 26.5% in the BAC group, and 40.7% in the crossover group.

The data presented by Dr. Pingpank on June 5th are the result of the trial’s Principal Investigator analysis and differ from results of the independent, blinded core lab analysis announced by Delcath on April 21, 2010.

Here is a video of a patient that has been saved, thanks to Delcath’s system:

Cutting Edge Chemotherapy- ABC World News with Charles Gibson

http://www.youtube.com/watch?v=H6bYnnaLKaw&feature=youtube_gdata_player

FDA Status

During the ASCO presentation in June 2010, Eamonn P. Hobbs, President and CEO of Delcath declared:

” We are obviously very pleased with these results, this study supports our belief that chemosaturation via PHP has potential life-extending benefits as a treatment for patients suffering with terminal, metastatic disease in the liver. Our rolling submission to the FDA is underway, and we are extremely excited by the future of this promising new treatment.”

We would like to remind you that a rolling submission process enables companies that have been granted fast track designation to submit sections of the NDA to the FDA as they become available.

Fast Track Status – the purpose of Fast Track Status (accelerated approval and priority review) is to speed reviews and provide more extensive guidance to sponsors about the nature of the evidence that will be required in order to support approval.

- Includes a ‘rolling review’ by FDA, where companies submit modules of an NDA (new drug application) for a rolling review which allows more frequent consultation and dialogue with FDA on issues related to the application.

- Fast Track may include ‘accelerated approval’ which allows the use of surrogate (secondary) endpoints likely to predict clinical benefit. The FDA would likely require post-approval studies in order to collect additional evidence about safety and benefit.

- Fast Track applications may also qualify for ‘priority review’ which means FDA sets a goal of completing reviews within 6 months compared to the standard process of 10 months.

Financial

In Aug 25, 2010, Delcath System announced that it has closed its previously announced offering of 5,185,000 common shares. Delcath received proceeds, net of offering expenses and underwriting discounts and commissions, of approximately $33.8 million. Delcath has granted Canaccord Genuity, the sole book-runner for the offering, an over-allotment option to purchase up to an additional 777,750 common shares on the same terms and conditions for up to 30 days after the date of the offering, August 16, 2010.

Delcath intends to use the net proceeds from the sale of the shares to fund additional clinical trials, research and development, obtaining regulatory approvals, manufacturing, operations, sales, commercialization of its products and other general corporate purposes, including capital expenditures and working capital.

Conclusion

There is actually no great treatment for any liver cancer. In our opinion DCTH’s system will be the gold standard of care, and will open up numerous opportunities for other big pharmaceutical and biotech companies which could use this system to benefit and test other cancer drugs.

The Market for USA only is estimated at roughly $750 million, and $5 Billion for off lable use. One other crucial point is that the drug delivery system is believed to be effective with most organs and cancers. The process also prevents chemotherapy drugs from getting into the patient’s blood, thereby lessening damage and side effects. The potential market for Delcath’s product is enormous. Management is highly motivated to succeed and seems to be on the right path.

We believe the recent decline in the value of DCTH’s shares is an overreaction, certainly due to the stock offering and the little delay to submit the rolling NDA. The fundamental outlook for Delcath company remains strong. They have excellent clinical data, significant market opportunity and a strong balance sheet with enough cash for at least the next 12 months. In addition, Delcath continues to pursue negotiations with potential partners for international marketing rights for the Delcath PHP system.

At $7.25 and a market cap of only $273 million, for a company with such great potential, we think this is a great opportunity. We target the $25 for the run-up before the eventual approval which we estimate to be around June-July 2011.

Full Disclosure:

-No positions on DCTH
-The Clever bull has NOT been compensated in any way by Delcath Systems to promote or write this article.

The Clever Bull team.

By reading The Clever Bull you agree to the disclaimer, and thereby will not hold The Clever Bull accountable for any transactions or decisions you make. It is up to you to do your own due diligence.

TheCleverBull.com is not a registered investment advisor and nothing contained in any materials should be construed as a recommendation to buy or sell any securities. The Clever Bull has not been compensated by any of the above mentioned companies. Please read our report and visit our Web site, www.thecleverbull.com, for complete risks and disclosures.

Most of the stories you will read today about the 2,200-page document that lays out how Lehman Brothers used accounting gimmicks to conceal its true financial condition will understate just how important the lies told by its top executives were.

This is one of those few news stories where there is much more than meets eye. The headlines are understating the seriousness of the deception Lehman’s executives employed in an effort to fool investors and creditors about the health of their investment bank.

The health of Lehman’s balance sheet was such an important question in 2008 that the bank went out of its way to claim multiple times that it was reducing the size of its balance sheet. Let’s start with the earnings call in June 2008.

“Regarding our balance sheet, we reduced our gross assets by $147 billion over the quarter, which exceeded the targets that we set,” chief executive Dick Fuld said at the start of the June 16th conference call in 2008.

“Turning now to leverage, we reduced our gross assets by $147 billion — from $786 billion to $639 billion — in the second quarter and we reduced net assets by $70 billion — from $397 billion to $327 billion. As a result, we reduced our gross leverage from 31.7X times to 24.3X at May 31, and we reduced net leverage from 15.4X to 12X prior to the impact of last week’s capital raise,” chief financial officer Ian Lowitt said on the same call.

Thanks to the bankruptcy examiner’s report, we now know this was not true. Lehman’s deleveraging was largely an accounting fiction. Fifty billion of it’s supposedly $70 billion reduction in assets was produced entirely through the Repo 105 transactions.

The importance of this deception cannot be overstated. Their should be no doubt in anyone’s mind that the amount of leverage and the size of the balance sheet was pretty much all that mattered at the time. The catch phrase at the time was “Earnings are the past. The balance sheet is the future.” The extra details the firm was offering on that June conference call were meant to reassure everyone about the health of the balance sheet.

On that same call, the third question came from Merrill’s Guy Moszkowski.

Guy Moszkowski, Merrill Lynch

Just a follow-up on the question about the asset sales and whether there were vintage concentrations or anything like that. How about with respect to timing? Were the sales pretty much ratably spread over the quarter, or were they more skewed toward either the earlier or the latter part of the quarter?

Ian T. Lowitt, Chief Financial Officer

They were spread over the whole quarter. I mean, it was a focus of the entire firm to de-lever through the course of the quarter. That was obviously a focus which shifted attention, to some extent, and I think that impacted the quarter in some ways. But it was even across the whole quarter so there was no concentration in terms of the timing. That was true across all of the elements, so that would be true within residential as within commercial.

This wasn’t true at all. In fact, according to the bankruptcy examiner’s report, $50 billion in alleged “sales” were actually repos timed to reduce the balance sheet for exactly the period necessary for earnings reporting.

Layne is divided into three operating segments: water and waste water (76% of 2009 revenues), mineral exploration (19%), and energy (5%). Its clients include municipalities, water utilities, global mining companies, oil and gas companies, and consulting civil engineers.

The largest segment of LAYN’s business deals with water. The company provides water well drilling services, water and sewer distribution remediation services, and waste water treatment services. As water management becomes more critical, LAYN’s services to repair in-the-ground distribution pipes for both water and sewer become more important.

Water shortages increase demand for LAYN’s well drilling services. Deep well disposal of power plant wastewater is a growing, and profitable, niche business in Florida. Of particular interest are its treatment facilities for the water used in natural gas shale fracing processes. As unconventional drilling increases, the need to treat drilling wastewater should provide parallel opportunities for LAYN.

Its mineral exploration business provides services to the mining industry, focusing on the copper and gold markets. In addition, this section provides soil improvement services for civil engineering construction project, such as levies and pipelines.

Layne owns and operates 45 natural gas wells, which are mainly located in the Midwest. Production is relatively small, and the company is not looking to become a big player in this field. LAYNE’s production is around 18.8 thousand cf/d. The company does not currently have the expertise to drill horizontal shale gas wells, but should gain parallel business from its shale well water waste solutions.

However, offsetting these outstanding niche markets, a large portion of LAYN business depends on the capital expenditures and repair budgets of local governments and utilities. With the current sad state of municipal financial affairs, many infrastructure upgrades are being delayed. In addition, residential water drilling is dependent on a healthy new construction market.

LAYN uses a fiscal January 31st year-end schedule for financial reporting. Layne reported 1st quarter 2010 ending April 30, and beat expectations (see conference call transcript here). The consensus on the street was $0.22/share, and the company reported a solid performance of $0.34/share. Revenues for the quarter increased 13% to $230.7 million.

The increase was driven by a rebound in the mining exploration business (+85% YOY) and higher overall gross margins (25.5% versus 21.7% YOY). Water related revenues were relatively flat at 2.9% growth, and the energy sector experienced a decline. Municipal and residential water business remains weak, but it is offset by strength in the commercial/industrial/military sectors. Due to low current market conditions, LAYN has not renewed its expired natural gas hedges that were sold at $7.17. With spot market prices in the $4.00 range, and futures in the $6.00 range, management is going to wait for better market conditions before setting additional hedges.

Layne Christensen offers interesting growth prospects due to its diverse and niche businesses – providing potable water to the military in Afghanistan, drilling waste disposal wells for power plants, treating waste from shale drilling, and repairing damaged municipal water/sewer pipes in-place without the need to dig them up.

Layne is a small cap company with a market cap of $517 million, has 19.5 million shares outstanding, and carries a very small debt of $26 million. Cash on hand as of 4/30 is $67 million, or $3.45 per share.

EPS in 2010 should be in the $0.90 to $1.20 range on revenues of $930 million. Next year, management is anticipated to generate around $1.45 to $1.60/share in earnings on revenues of $980 million. This is based on slightly better performance in the water business, continuing strength in the mining sector, and flat performance from the energy sector.

Historically, Lane Christensen’s stock price valuations have been on the expensive side. The followers on the street seem to like the fundamentals of the company, but several believe the current price already reflects an earnings turnaround, and therefore rate LAYN as a hold based on valuation. These are some concerns that the strength of the mining business may not continue through year end, along with anticipated weak water and natural gas markets.

Layne Christensen deserves to be on a list of cyclical stocks to research. The company is well positioned in niche markets that will experience a rebound as economic activity picks up here and abroad. LAYN has the ability to generate $2.20/share in earnings within a few years. This will match its previous record earnings in 2007 and 2008.

The stock appreciated 12% upon release of 1st quarter numbers, and is in the middle of its trading range of $24 to $30 since November 2009. LAYN should reach the low- to mid-$30s during middle-cycle valuations, and upwards of $40+ at the peak of the next business cycle, as all sectors recover from the recession. While a bit expensive at its current price, I think LAYN is worth buying on pullbacks to the $24-$25 area, and a dip below this level could be a good value.

Disclosure: Author long LAYN

In addition to the recent drop in oil, the catastrophic oil spill in the Gulf of Mexico hurt oil companies as well. The driller BP plc (NYSE:BP) has taken the brunt of the hurt in their stock price but other companies like Transocean LTD (NYSE:RIG) have also been severely hit. Even Exxon and Chevron have been hurt slightly over future drilling prospects. Positive news has been leaking out (pun intended) that the oil spill may have stopped. This is great news for the oil companies as a whole as the negative press may start to subside. In addition, BP is jumping almost 7% and Transocean is up 6% on the day. Happy days are here again for the oil stocks, at least for today.

Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com

The Graying of America

It’s no secret that America’s population is aging, and aging fast. As we age, our need for healthcare at all levels increases with each passing year. The most frightening aspect of growing old is the prospect of being uprooted from your home and placed into a geriatric institution. Therefore, home healthcare is a very attractive option.

Small Cap Growth

Almost Family, Inc. (AFAM) is a small-cap company that serves this burgeoning market. Founded in 1976, this Louisville, Kentucky headquartered provider of home healthcare is strategically well-positioned for above-average long-term growth. Figure 1 below looks at Almost Family, Inc. through the lens of our EDMP, Inc. F.A.S.T. Graphs (Fundamentals Analyzer Software Tool) since 1996. Note how stock price (black line) has closely tracked earnings (green line with white triangles), and further note how earnings growth has accelerated since 2004 (yellow shaded area).

Figure 1 AFAM 15yr EPS Growth Correlated to Price (click to enlarge)

Figure 2 below calculates shareholder’s performance that applies to Figure 1. Long-term shareholders have been well rewarded in close proportion to earnings growth. Furthermore, even though the stock price fell precipitously starting in the fall of 2008 and into March of 2009, earnings held up and therefore price has recovered strongly. Yet even after this recovery, Almost Family, Inc. (AFAM) only traded at a blended PE ratio of 12.7 on Tuesday’s 4/27/2010 closing price of $38.61.

Figure 2 AFAM 15yr Price Performance (click to enlarge)

Thesis for Growth

Almost Family Inc. operates 90 locations in 11 key states. They operate two segments: Visiting nurse providing in-home skilled nursing and personal care services. Florida, Kentucky, Connecticut, Ohio and New Jersey are key markets with large elderly populations. In your own home, services provided by their many subsidiary companies are in high demand. The ability to have your needs cared for in your own home is both comforting and attractive to clients.

Earnings Beat Analysts Expectations

Today, April 28, 2010, Almost Family reported Q1 earnings that beat analyst expectations by seven cents. Management was upbeat regarding reasonable reimbursement visibility for at least the next three years, thanks to the recent passage of healthcare reform. The stock market reacted favorably pushing Almost Family’s stock price above $40, up approximately 5%.

However, we believe that Almost Family is still very attractively valued at just over 13 times earnings. They generate very strong free cash flow and have a healthy balance sheet with only 2% debt. Consensus estimates reported to both FirstCall and Zacks look for 20% five-year earnings growth going forward.

Conclusion

We believe Almost Family, Inc. is well-positioned for growth and trades at a very attractive valuation. Therefore, investors looking for above-average growth and willing to assume the risk of owning a small-cap company should consider Almost Family, Inc.

Applied Materials, Inc. (Applied) provides Nanomanufacturing Technology solutions for the global semiconductor, flat panel display, solar and related industries, with a portfolio of equipment, service and software products. The Company’s customers include manufacturers of semiconductor wafers and chips, flat panel liquid crystal displays, solar photovoltaic cells and modules (solar PVs), and other electronic devices. It operates in four segments: Silicon, Applied Global Services, Display, and Energy and Environmental Solutions. Applied’s Silicon Systems Group (SSG) develops, manufactures and sells a range of manufacturing equipment used to fabricate semiconductor chips, also referred to as integrated circuits (ICs). The services and products offered by the Applied Global Services segment include Fab Services, Mature Technology Services, Automation Systems and Abatement Systems. In December 2009, Applied Materials, Inc. acquired Semitool, Inc.

The laggard in the market has really been last years leaders such as copper, gold, and silver. While these stocks have bounced from the February 5th correction low, they have not come close to reaching the January highs. Leaders in the copper stocks such as Freeport McMoRan Copper and Gold Inc. (NYSE:FCX), and Southern Copper Corp (NYSE:SCCO) are higher, however, they are not leading the markets as they did back in January.

The legendary trader Jesse Livermore used to say that the markets could be followed by watching copper. If copper headed the markets, then the rally was strong. If copper lags the markets than something was wrong. At this time copper stocks are holding up well, however, they are not leading this rally since February 5th, 2010.

Could this be signaling trouble for the major stock indexes in the near future? It is certainly possible. Therefore, copper stocks should be watched closely at all times.

Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com

(Public, NASDAQ: GNBT)

This past year, small cap  biotech investors were witness to some of the most profitable gains ever recorded. The only way to encapsulate it would be through two simple words, “FDA Approval”. Yes, any company with high probability of approval on their blockbuster drugs saw their shares literally explode beyond technical analysis comprehension. Companies like Dendreon Corporation (NASDAQ: DNDN), Human Genome Sciences (NASDAQ: HGSI), and MannKind Corporation (NASDAQ: MNKD) went from relatively unknown bench warmers to being the MVP trades of the year, having their share prices gain multi-hundred percentages while leaving investors hungry, salivating for the next candidate. Many tried, yet only a few succeeded to truly join the winner’s circle. So, now comes the tough question, how do we find a major exchange stock, one that has the right volume to attract institutional investors, as well as the ability to generate buzz within the investment community.  After having our team spend months conducting due diligence, we strongly believe we have found it, and boy are we ever excited.

The following is a compilation of due diligence on our first company profile for the new year, Generex Biotechnology Corporation (NASDAQ: GNBT). To truly grasp the market potential of this company, one has to look at the main products, so of which already approved and marketed,while others are on the verge of being approved to be marketed in the US & Worldwide global markets. The tip of the iceberg hasn’t even been scratched on this remarkable company, hopefully this analysis will shed some light and once again garner attention while shares are still highly undervalued. Perhaps one of the best kept secrets of 2009, Generex looks to break into the spotlight during 2010 and establish itself as a highly profitable and dominant player within the biotech industry.

About Generex Biotechnology Corporation

Generex Biotechnology Corporation (NasdaqCM: GNBT) is a leader in drug delivery for metabolic diseases through the inner lining of the mouth. Generex has developed a proprietary platform technology for the delivery of drugs into the human body through the oral cavity (with no deposit in the lungs). The Company’s proprietary liquid formulations allow drugs typically administered by injection to be absorbed into the body by the lining of the inner mouth.

Generex’s flagship product, Generex Oral-lyn™, an oral insulin spray for the treatment of diabetes, is approved for sale in India, Algeria, Lebanon and Ecuador, and is in Phase III clinical trials with over 347 patients being enrolled in 74 clinical sites around the world, including sites in the United States, Canada, Bulgaria, Poland, Romania, Russia and Ukraine. Also, Generex has developed MetControl™, a proprietary Metformin medicinal chewing gum, which is currently being prepared for submission to various regulatory authorities throughout the world.

Generex’s product pipeline includes: Generex Oral-lyn™, MetControl™ Metformin Gum, Glucose RapidSpray™, BaBOOM!™ Energy Spray, Crave-NX™ Day Diet Aid Spray, Fentanyl Spray, Morphine Spray, Breast and Prostate Cancer Vaccine and Avian Influenza Vaccine.

Generex’s wholly owned subsidiary, Antigen Express, Inc., concentrates on developing proprietary vaccine formulations that work by stimulating the immune system to either attack offending agents (i.e., cancer cells, bacteria, and viruses) or to stop attacking benign elements (i.e., self proteins and allergens). Clinical development of Antigen’s synthetic peptide vaccines designed to stimulate a potent and specific immune response against tumors expressing the HER-2/neu oncogene for patients with HER-2/neu positive breast cancer in a Phase II clinical trial and patients with prostate cancer and against avian influenza in two Phase I trials. Additional development efforts includes seasonal influenza virus, H5N1, HIV, HPV, melanoma, ovarian cancer, allergy and Type I diabetes mellitus.

Product, Trials, and Phases Matrix

The Rise of the Tides

After reaching a low of $0.45 per share during the end of November 2009, the company’s stock bounced off the support and never looked back. News has been flooding the headlines lately, causing shares of the company to recently gain some much needed momentum. With cash burn of nearly $8.2M annually, something needed to be done in order to save the company from digging itself into a deep financial hole. While it does have a respectable $26.2M cash on hand, you can rest assured liabilities, cost of clinical trials and marketing / distribution efforts would eventually catch up. Worst of all, a second dilution may have been on many investors minds, plaguing / negating any thoughts of entering a position in the company. Amidst all of this, salvation came at hand, two official company press releases in the form of 7000 stores (most speculating this pharma giant to be CVS) generating an order of $800,000 for Company’s proprietary Crave-NX(TM) 7-Day Diet Aid Spra.

Finally, a viable reocurring revenue stream which will see its balance sheet turn positive, and thus allow it to easily flow (either in Q3/Q4)  into  its much anticipated phase III breast cancer immunotherapeutic vaccine, and its long awaited NDA on its type I, type II innovative insulin treatment, where approval is almost certain due to USFDA’s Treatment Investigational New Drug program. It is important to note that 39 companies, according to a BioWorld report have attained this status, and all 39 have attained FDA approval. Both events are scheduled to come into fruition sometime mid-to-end 2010.  Additionally, in a recent PR, Generex noted that, “This latest FDA approval will permit the Company to charge for the product to recover costs.” meaning that they have the ability to obtain a small portion of sales which could potentially help generate some further revenues.

For a list of complications derived through needle based insulin intake, visit the following link.

Another overlooked factor which gives Generex’s Oral-Lyn treatment a significant advantage over the pre-existing ones is patients who are prescribed with Trypanophobia. This condition is the extreme and irrational fear of medical procedures involving injections or hypodermic needles. People who suffer from vasovagal trypanophobia fear the sight, thought, or feeling of needles or needle-like objects. The primary symptom of vasovagal trypanophobia is vasovagal syncope, or fainting due to a decrease of blood pressure.

The Cancer Immunotherapy Index has perhaps never been a hotter investment. It  has appreciated at a 100% annualized rate since its creation by Mentor Capital, July 10, 2009. In fact it has been so successful that in response to the resulting investor interest, Mentor Capital plans to initiate an actively managed Cancer Immunotherapy Index fund in January 2010. A significant majority of Mentor Capital cash proceeds that spring from its $140 million in freely tradable warrants are targeted to be invested through the fund. Some of the companies included will be: Dendreon (NASDAQ:DNDN), Oncothyreon (NASDAQ:ONTY), ImmunoCellular Theraputics (OTCBB:IMUC), Antigenics (NASDAQ:AGEN), Biovest International (BVTI.PK), Celldex Therapeutics (NASDAQ:CLDX ), Northwest Biotherapeutics (OTCBB:NWBO), CEL – SCI Corp. (AMEX:CVM) and Generex Biotechnology (NASDAQ:GNBT). This ensures that institutional investors will be made well aware of Generex in the upcoming year, after all, they have a network just like we do — you can bank on it that they will be using it to communicate the hottest companies to each other.

A Quick Backgrounder on Generex’s Ii-key Hybrid Vaccine AE37 for Breast Cancer can be found by clinking this link.

To understand Generex’s wholly owned subsidiary, Antigen Express, Inc. unique cancer technology, visit this link.  In short, the immunotherapeutic agent being developed by Antigen Express is a peptide derived from a tumor-associated protein that has been modified to enhance stimulation of CD4+ T helper cells. The target protein is encoded by the HER-2/neu oncogene, which has been found to be over-expressed in a variety of tumors, including breast, ovarian, prostate, lung, colon, stomach and pancreas.

Market Potential of Crave-NX, Oral-Lyn, and Breast Cancer Immunotherapy Vaccine

World Diabetes Market

Diabetes effects approximately 170 million people worldwide and is increasing, with the WHO predicting 300 million diabetics by 2025. The US alone has 20.8 million people suffering with diabetes. This equates to approximately 6% of the population. It was the 6th most common cause of death as recorded on US death certificates.

The Global Diabetes drugs treatment market was valued of $15 billion in 2005. Oral anti-diabetics were the leading category of drugs – $8.19 billion – and showed a growth rate of 6.3% from the total global sales in 2004. The total sales for insulin products increased by 16.5% to total global sales of $6.83 billion in 2004.

The Global Diabetes Market Will Exceed $21 Billion by 2011. All figures verified using this source.
Cancer Immunotherapy Market

• The global market for immunotherapies to treat cancer was worth $19.6 billion in 2006 and will reach $23.7 billion by the end of 2007. At a compound annual growth rate (CAGR) of 9.5%, the global market will be worth more than $37.2 billion by 2012.
• Monoclonal cancer treatments have the largest share of the global market. In 2006 they were worth more than $10.4 billion and will reach more than $16.1 billion by 2012, a CAGR of 6.2%
• Cancer vaccines have the greatest potential for growth, growing at a CAGR of 35.2% to reach more than $5.4 billion by 2012. All figures verified using this source.

Some important highlights are:

• IND Treatment Status means that doctors in offices, and anywhere else can sell it. Only diff between full lavel approval is
  that they can sell in drug stores and such.
• Monthly events
• Expecting a partner sooner than expected
• New 23 year patents

Company Overview by Dr. Joseph Rubinfeld, Chief Scientific Advisor

*The following is a compilation of the three part press releaseases issued by the company

For most people when it comes to Generex, the focus is squarely on its flagship buccal insulin spray product, Generex Oral-lyn(TM), and its application in the diabetes arena. That focus is understandable as there is no doubt that, in order for the Company to achieve near-term large scale commercial success, Generex Oral-lyn(TM) must lead the way. I also believe that in addition to the other promising drug programs such as cancer vaccines and synthetic influenza vaccines, what is often overlooked when people evaluate Generex is that the success of Generex Oral-lyn(TM) may well validate Generex’s proprietary RapidMist(TM) drug delivery method and open up a myriad of lucrative opportunities for the Company.

In order to understand the magnitude of successfully delivering a protein-based molecule through an other-than-injectable delivery method, all one has to do is look at the billions of dollars that have been spent by some of the world’s largest pharmaceutical giants in failed efforts for delivering insulin through the lungs. And here is our Company, which stands on the verge of succeeding in not only accomplishing this task but, also accomplishing it without entering the pulmonary system and at a fraction of the cost of even one of the failed efforts by big pharma. Should Generex obtain FDA approval for Generex Oral-lyn(TM), it will enter the multibillion dollar market for diabetes treatment in the U.S. and it will also have the key to replicating this delivery for a broad based group of similar drug therapies for a variety of illnesses. Indeed, a complete success down the road would be the approval of the delivery system itself, enabling Generex to partner with other drug companies to extend the patent lives of their drugs through a less invasive delivery method. In each case, there would be the potential for large royalty streams on proven drugs for years to come.

Taking this one step further, if Generex were to become a large revenue generating company through the success of Generex Oral-lyn(TM), and its delivery method was also validated by use with other drug therapies, it would be then be possible for Generex to create a host of “super generic” drugs using its proprietary RapidMist(TM) drug delivery method and needing only to demonstrate bioequivalence, opening further multibillion dollar opportunities. Now of course this would be down the road a ways and a good many things would need to go in our favor for this to become a reality. However, it is not inconceivable that a multibillion dollar broad based drug company can grow out of our small and relatively unknown Company.

I chose to be the Chief Scientific Advisor to Generex because of the vast potential I see for the technologies and science possessed by this Company. People have called me “The Grandfather of the Industry” or “The Sage of Biotech” but in the end, I am just a researcher and an entrepreneur at heart. I see Generex as an opportunity for me to stay on the biotechnology rollercoaster which I love and ride it to a multibillion dollar success as everyone at the Company works diligently to have a positive impact on the lives of people with diabetes, cancers, influenzas or the many other diseases we may address down the road.

A Brief Roadmap on Generex

*All statements are assuptions based on SEC reports, recent news and interviews
1. Moving from R&D to market penetration with their OTC drugs.

2. Enjoying sales of OTC products to offset their operational expenses monthly.

3. Using revenues from sales of its OTC to expand Oralyn globally.

4. Given that Oralyn is globally and approved in US and Canada, expect that they will expend all energy to develop Breast Cancer, Prostate Cancer, Cervical, and Flu drugs to market.

5.Overseas markets are awaiting Oralyn, approvals from FDA .If approved, will expand to Europe, Middle East, Canada, and manyother parts of the globe simultaneously.

6.Reducing expenses, creating a market Globally for all its products.

7.Reducing float and outstanding shares (OS) , by repurchasing shares in company.

8. No more dilution of shares, may seek partnerships and receive royalties. Buyout has not been named as an option.

Why Investors are Bullish on Generex

• N.I.C.E UK update expected by end of January, 2010
• A/E 37 is expected to be a multi-blockbuster likely
• Oralyn close to finish line on first (and perhaps only) Phase III completion in USA
• IND Treatment Status for Oral-Lyn (no drug granted special access by the FDA has been denied approval)
• Special access in Canada for Oral-Lyn
• Oralyn India already approved
• Oralyn South Korea already approved
• Oralyn Lebanon already approved
• Insulin Supply Deal with Sanofi Aventis

Generex Biotechnology Corporation ( GNBT) Short Interest

Growing short interest for this type of high potential company only makes it easier for the price to increase substantially when a squeeze takes place.

Technical Analysis

There are a number of key bullish indicators when trying to identify a long-term uptrend. The first being, a general rising support level, with healthy consolidation along the way. Secondly, having high volume “buy” days which exceed the volume of the more often “sell” days. The next is a steady RSI which stays above the 50 marker more often than below. Money Flow Index (MFLI) should also display that more money pressure is being placed by buyers through purchasing the stock, rather than selling it for liquid cash. All of these factors are present with Generex, now lets take a closer look:

Notice that the MACD divergence is beginning to turn positive, signalling the start of a bullish trend. The Money Flow Index indicates that the stock is neither engaged in over-selling or over-buying, but is rather set in the 50s, and trending upward which makes it prime and ready for an exchange to the buyers side of the market. We are currently sitting at a major support level at $0.68, next resistance should be upper $0.7s to low $0.8, with a breakout to $1.00 should these be broken. The company recently finalized its financing giving stock warrants (as per the latest 10-Q) at $0.76, $0.79 and $1.00 pps levels, so expect these to be small resistances, though not major, as they only represent 3x to 4x daily average volume. Looking at the recent trend, the buys (green bars) days have had higher volume than the selling (red bars) days, representing a long-term bullish signal, as the stock continues to climb, consolidates, and continues upward. This pattern is seen from the 0.1 level all the way to the current 0.61 level, as the green buying days have always had higher volume than the smaller red selling days. During last week, a doji was formed which represents indecision by the market. The recent news offset this indecision, trending it for a bullish run-up. Expect another test of the $0.80s in the coming days / weeks.

Disclosure: Long GNBT

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