Ebola Scare Sector Jump

I remember after 9/11 all the airlines got a sector scare. Also after major school shooting all the guns stocks fell. Now there is an ebola scare: There was news yesterday that there was an Ebola patient in Texas and they are scrambling to find everyone that he came in contact with. Uh oh! Looks like AMC's living dead is actually gonna happen, right? Hey, lets run to a pharmaceutical stock that has no treatment for Ebola yet on the market that only has something in stage 1 testing, where it could be years before any of this treatment could hit the market, even with the FDA fast tracking it!
     This is how the public thinks. The public is one quick reacting inefficient mass. This is how we at the 1045 report make our money. Now lets look at the price action of TKMR:

You can see from the above chart that this happened before with an earlier scare of Ebola back on August 11th: an unjustified running to this stocks perceived safe harbor when there was big scare talk of ebola in Africa. But what did this stock actually have? Lets look at the news from that day:
Shares of Tekmira Pharmaceuticals Corp.(TKMR) soared over 45% to end the trading session on Aug 8 at $20.70 per share following encouraging news from the FDA on its Ebola candidate TKM-Ebola.

In Jul 2014, the U.S. regulatory body had placed Tekmira’s phase I study on the Ebola candidate on clinical hold due to safety concerns. TKM-Ebola was being developed by Tekmira under a contract worth $140 million from the U.S. Department of Defense. However, pressure has been mounting on the FDA to expedite the approval of an anti Ebola drug following its deadly outbreak in Africa, which has so far claimed multiple lives and shows no signs of diminishing in the absence of an approved drug to combat the deadly virus.

The FDA responded by giving a verbal assurance to Tekmira that it is converting the full clinical hold on TKM-Ebola to a partial clinical hold. The FDA’s move allows the potential use of Tekmira’s candidate to treat Ebola infected patients. TKM-Ebola enjoys fast track status from the FDA.

Apart from Tekmira, privately held Mapp Biopharmaceutical and BioCryst Pharmaceuticals (BCRX) are also developing therapies to combat Ebola.

We believe the FDA’s decision on TKM-Ebola will come as a relief to Ebola patients and doctors alike with the disease threatening to spread to other parts of the world from Africa (read our earlier coverage: Tekmira Pharma in Focus as the World Awaits Ebola Treatment). We believe investors at Tekmira will be keenly watching how TKM-Ebola is utilized to prevent the spread of this dreaded disease.

Canada-based Tekmira carries a Zacks Rank #3 (Hold). 

Ill translate the article for you: Nothing. Not for a while. TKMR is still floating in the same boat, people running around trying to develop something quick and not having it when they need it...NOW.

Now lets look at TMKR's price action and technicals. You can see that the RSI is in overbought territory and the MACD is in a down cycle. During the last big peak on Aug 11th, the candlestick was long and white, which displayed big strength. Usually after a long big white candle on the sudden uptick, there will be further upward gains as was seen the next day on Aug 12th.
But today is different. There is a non committal small red candle. This does not show strength Plus other people and technician scan see that there is a difference in the upward price action between today Oct 1st and Aug 11th. Less strength.
Also due to the price action and the fact that this stock has nothing for ebola and the fact that there is a sector scare happening, I would like to state right here that I am prepared to double down.
I double down VERY RARELY because it is usually a fools game. However in a situation like this, the crowd may be very spooked and this might carry over into tomorrow or even the day after if the scare is big enough. So I bought a put option, the Oct 25s, as priced below. If the stock jumps again tomorrow, depending on the price action and the volume, I am prepared to purchase another put to cover. If the stock hangs, or drops, we will sell at a profit.

So that's that for today. Stay frosty.
Mark

25.00

TKMR141018P00025000

2.45

2.52

2.35

2.65

452

152