This is a follow up to my post, “ISIS Pharmaceuticals breaches long term support.” As many of you may know, posts from this blog are often (though not always) syndicated on SeekingAlpha.com. In the case of my previous post on ISIS, I caught significant flack from the SeekingAlpha community. Among other things, I was accused of not understanding how to invest in biotech and generally missing the point on Isis’ anti-sense technology. (For those interested, I actually posted on Isis’ business and fundamental value in a previous post.)

Well, I figure it’s time to post a follow up to my previous post. To recap, here is the chart I posted on October 5, 2009. This is a three-year weekly chart which I typically use to determine the intermediate/long term market trend driving the stock.

In

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In my previous post on the Allied-Ares merger arbitrage opportunity, I introduced a topic which I realized I’ve never quite talked about here on The Curious Investor. As I intend this blog for both beginning investors and seasoned investors alike, here’s a run down on the concept of merger arbitrage.

What is arbitrage? Rigorously speaking, arbitrage is the practice of taking advantage of a price differential between two markets which allows the arbitrageur, or person taking advantage of the arbitrage, to obtain a risk-less profit.

Technically speaking, an arbitrage refers to a situation where the same asset sells for a different price in two markets. For example, a textbook in the UK selling for $20 and a textbook in the USA selling for $100. The arbitrageur would buy the UK textbook and simultaneously sell the USA textbook and pocket the $80 difference.

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In my prior post, “Allied Capital Goes from Value Trap to Deep Value,” I made the point that the Ares/Allied acquisition created a potentially interesting merger arbitrage opportunity. As astutely pointed out by commenter BeauZeau at Seeking Alpha, the merger arbitrage opportunity is not quite as large as I portrayed.

In a classic merger arbitrage, the investor ought to short the acquiror (ARCC) and buy the target (ALD). That is because, assuming that the deal closes, the target and acquiror shares are now representative of the same asset. Consequently, any price discrepancy between the two stocks represents a fundamental disconnect with underlying value*. In the case of ARCC and ALD, I posited that the proposed exchange rate of .325 ARCC shares for each ALD share creates an opportunity based on current closing prices.

*Those familiar with the concept of arbitrage will see my description of

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I’ve written extensively about Apple this past year. And, not without reason. Investing in the stock has been a very fun ride ($89 – $200 in a little over 6 months). The Company whether it be delighting users with new products or frustrating users with its mismanagement of the iPhone app approval process has managed to stay in the headlines and, as a result, remains a plentiful mine for content. Because Apple has a contentious group of zealous fanboys, let me start with my Apple Investor Disclaimer and then get on with the post. This is specifically for mac fanboys, so those who have an open mind and understand how one can have a differing views of a Company and the Company’s stock valuation, just skip the blockquote below.

I, the author of The Curious Investor, am currently long Apple stock. In fact, it makes up nearly 10% of

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For those that follow this blog, I once wrote about an asset class known as business development companies, particularly middle-market lending BDCs. These businesses typically concentrate on investing through the financing of middle-market private equity transactions. Over the last year, some have come under pressure as a result of government regulations over BDCs which require them to maintain certain asset coverage levels. As a result of the disjunction in the markets, mark-to-market mark downs on BDC portfolios resulted in some BDCs (most recognizably Allied Capital and American Capital) falling out of line with asset coverage regulations, tripping debt covenants, and discontinuing dividends.

On Monday, a major shakeup was announced within the BDC industry. Ares Capital (ARCC), one of a few BDCs which has managed through the recession while maintaining a substantial dividend, announced that it was acquiring a former giant

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Been meaning to write this post for a while, but it seems that my patience has paid off as I have even more chart evidence to work with. And, that is the main point of this post. Technical analysis is not a means for predicting the future. That may seem paradoxical to those who have seen me use technical analysis to attempt to determine buy and sell points. If technical analysis isn’t for predicting the future, then how can it be useful?

What I mean by technical analysis isn’t meant for predicting is that rigorous technical analysis isn’t a means for front running what you “think” may happen to a stock. It’s a means for gleaning information from an existing chart about an existing trend and helping the practitioner to make investments with underlying market supply and demand behind them.

I came across this post, “Are Sears Holdings shares headed for

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Ah, this weekly update thing is difficult to keep up. I’ve been keeping track of interesting articles, but I just don’t seem to find the time to post them. I’ve got a mish mash for you all tonight. Get reading!

Before we begin, I want to help a fellow blogger promote his new Value Investing Forum. Jonathan Goldberg is an MBA from the University of Western Ontario and has a value investing blog at JonathanGoldberg.com and hopes to inspire a community of investors to share ideas (much like my goal at TheCuriousInvestor. So, COMMENT!)

Without further ado, here are some articles which piqued my interest last week (or two).

Chris Whalen, managing director at Institutional Risk Analytics (via Jesse’s Cafe Americain) believes that Q4 will be a bloodbath for the banking industry. Dividend Growth Investor discusses the benefits of an emotionless sell policy. I ...

I wrote a little while back about the rumored Apple Tablet.  At the time I talked about my desire for a product which would truly legitimize the netbook/UMPC category. Apple has done a terrific job differentiating its computing offerings. The majority of computer users start with a laptop for general everyday use and occasional mobility. Power users might buy a desktop for more horse power. And, everyone needs an iPhone for highly mobile media and light productivity. To me, the natural follow on to these three product categories is a full on mobile productivity device.

The Mobile Productivity Device In my post on the Apple Tablet, I talked about my image of the perfect mobile device being shaped by the viral Microsoft Origami Project videos circa 2006. Well, leave it to Microsoft to drop yet another follow on which I think once again targets my

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I highlighted Isis Pharmaceuticals a few weeks ago believing that a sell-off causing a price decline from $19 to $16/share was a prime opportunity to buy a potential high-growth business. It seems, however, that my proclamation may not have been entirely correct. And, post last week’s trading, I’ve liquidated my position in ISIS. Do I still think ISIS could present a tremendous opportunity to invest in next-generation biotechnology? I do. But, with markets seemingly reaching a top and real cash flow in ISIS years away, it’s probably better to be safe than sorry. Moreover, lacking the ability to perform accurate fundamental analysis due to ISIS’s place on its growth curve, an investor is left only with technical analysis to guide the investment process and, as I will show, ISIS’s charts no longer paint the profoundly bullish picture they once did. Before I begin, I recommend those unfamiliar

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Seems the bull market rally we’ve seen since March is beginning to shudder and stall. It’s becoming more and more difficult to find can’t miss opportunities and, at least for me, the focus has become the preservation of capital and keeping an itchy trigger finger ready to harvest gains. With that said, let’s see what other bloggers are up to.

thinks natural gas may be showing signs of life. Having written about natural gas in June and been way early to the party, I sure hope they’re right. Maybe my intuition will be vindicated. The Technical Indicator (Marketwatch.com Newsletter) wrote up a great analysis of U.S. stock market indices. While, at the time the article was written, bulls were mounting a gallant fight, it seems the S&P has finally lost the battle to ...