Protox Therapeutics Inc. carries small cap risk

Jun 25th, 2010 – Comment

Its never a great idea to chase a stock that has chewed up your capital. Leave your position where it is and look for another opportunity to profit.


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protox

Is this a good time to buy more of this stock? It does not seem to go upwards?

Thank you for your advice

Nihal

 

Hi Nihal,

Protox Therapeutics Inc. (PRX TSX) is on the hunt for a cure for enlarged prostate in addition to  prostate and brain cancers. As a small cap company working through the clinical trials process there is an implied higher risk to their mission of getting a share of a market estimated to be worth billions of dollars. The smaller the market capitalisation of a stock the higher the risk.

 

prx

The three year chart illustrates the case of stock that had a great run to a high of $1.10 in early January of 2010 but  has been selling off ever since. The MACD provided a great signal that the momentum was shifting to the downside giving investors plenty of time to book profits or preserve capital.

 

 

 

 

 

prx2

The six month chart isn’t what I would call robust. The April 29, 2010 announcement that PRX had signed a $75M license deal got the stock to pop but the move didn’t hold. The June 2, 2010 report of what the company called good results from their Phase 2B trial of their treatment for an enlarged prostate didn’t do a thing for the stock .

 

There is support at about $0.40 and a period of seasonal strength for bio tech stocks that is just beginning and runs until early September. As to your question regarding buying more. Its never a great idea to chase a stock that has chewed up your capital. Leave your position where it is and look for another opportunity to profit.  The main reason I say that is to encourage you to diversify your risk.

MAKE IT A HUGE G20 WEEKEND AND HAPPY CAPITALISM!

Categories: Biotechnology
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