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Penny Biotech Stocks Flying

By Adam Feuerstein
06/03/09 10:16 a.m.

We're living in some crazy, speculative times in penny-stock biotech land.

Cell Therapeutics

(CTIC) - Get Report

,

Hemispherx Biopharma

(HEB)

,

Antigenics

(AGEN) - Get Report

and

Oculus Innovative Sciences

(OCLS)

are all flying higher in a whirlwind of speculative, retail and daytrading activity. All these companies have experimental drugs and/or products that are among the worst of the worst. Yet the stocks are extremely hard or expensive to borrow, and that is putting short-sellers in a bind.

Amazing.

Eyes on Bernanke's Bond Thoughts

By Marc Chandler
06/03/09 7:52 a.m.

The market will focus on Bernanke's House testimony today to see if he suggests the

Fed

is looking to increase the size of its Treasury purchases. Such an announcement is more likely at a FOMC meeting -- next scheduled: June 23-24 -- where there is full participation from the board.

After recouping a portion of recent losses, U.S. bonds are not out of line with global markets. This market settling may partly be due to Chinese, Japanese, Russian, Indian and South Korean officials reaffirming that the dollar will remain the world's reserve currency following rumors that BRIC countries are seeking otherwise.

Restoring Fiscal Discipline

By Tim Melvin
06/03/09 10:53 a.m.

The very first inklings of what is coming next were fired this morning on Capitol Hill. Even as we rack up a $1.8 trillion budget deficit, Ben Bernanke is telling Congress we need to take steps to cut the deficit to reassure the global financial markets. Since no one is, or could, be talking about cutting spending, there is only way to accomplish this task. Turn on the printing press and raise taxes across the board. The Fed chairman said that the forceful government intervention was necessary to stave off a recession but that we needed to start planning for a restoration of fiscal balance.

The easiest source for achieving this fiscal balance is going to be corporate America. Taxes are going up on corporations and on wealthy Americans, and I fail to see how that is good for the market. They are going to use inflation to monetize the debt. It does make me feel pretty good about being short Treasury bonds, however.

Levels

By Dan Fitzpatrick
06/03/09 12:18 p.m.

Fluor

(FLR) - Get Report

and

McDermott

(MDR) - Get Report

(both stocks in the heavy construction industry) are falling back and are likely to test their 200-day moving averages.

Predictable.

Positions: Long MDR

Valero Gets Whacked

By Gary Morrow
06/03/09 1:50 p.m.

Valero Energy

(VLO) - Get Report

is at the top of the list of dollar decliners on the

NYSE

. The stock is off over 15% on extremely heavy trade.

Investors are reacting to the company's announcement of an expected loss of 50 cents per share in the second quarter.

Valero began the day with a devastating breakdown gap that dropped the shares below the May lows. The stock is now trading under a narrow bullish channel it had been tracing out since bottoming in early March. This trend break will likely lead to a re-test of last year's fourth-quarter triple monthly bottom near $15.00.

The weekly chart of Valero is even more damaged than the short-term charts.

There is still quite a bit of time left in the week, but it is very likely that the stock will close out Friday well below the lows of last week. Following Monday's very strong open, which was above the previous week's highs, a weekly close below $20.00 would leave behind a key reversal week on expanding volume.

I expect much lower prices before Valero can begin to form a new base.

No positions

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This article was written by a staff member of RealMoney.com.