Thursday, March 20, 2014

Metabolix Just Left the Ground (CERPQ, KRA, MBLX)

Metabolix, Inc. (NASDAQ:MBLX) isn't exactly a name hat turns heads within the investment community. With a market cap of only $54.6 million, even big news from the company isn't a game-changer for the market. And, the fact that traders have a tough time defining what the company "does" hasn't helped the MBLX cause much either. Yet, the size of the company and the service it provides don't change the fact that the bullish Metabolix switch got flipped all the way to the on position on Tuesday.

In simplest terms (which still aren't all that simple), MBLX is a biochemistry company. Specifically, Metabolix makes polymers that are environmentally-friendly, meaning these polymers - plastic substitutes - are either biodegradable, and/or made from a biochemical process rather than traditional petroleum-based processes. The company also has developed processes and chemicals that can turn plant life into renewable chemicals or energy sources.

The whole thing may seem a little "out there" at first glance, but truth be told, what Metabolix, Inc. does isn't terribly unusual anymore. It's just a little less sexy than what traders and stock speculators usually want to see and hear with their picks. Kraton Performance Polymers Inc. (NYSE:KRA) and the now-bankrupt Cereplast Inc. (OTCMKTS:CERPQ) are/were in the same business, along with several others. [Don't let the Cereplast bankruptcy filing deter you - it wasn't a lack of opportunity that up-ended CERP.]

That's not the important part of the MBLX story right now, however. Neither is any recent news, because Metabolix hasn't generated any press activity since last year, other than to announce it would be presenting its technology at trade shows, and to announce when it would be hosing its Q4 and full-year-2013 conference call. (It's Thursday, March 27th, for those who are interested.) No, the most interesting story about this company right now is the one its chart is telling. The chart is saying the company's turned the corner, and now's the time to step in.

The daily chart of MBLX best illustrates the idea. As of last week, shares have crossed above all their key moving average lines, and as of yesterday they've hurdles a key ceiling at $1.54. Yesterday's breakout came on strong volume too, suggesting the surge has the interest and participation it needs to keep going.

The weekly chart doesn't exactly tell us anything we don't know already. But, the weekly chart does put into perspective just how big of a deal the sharp rebound (on high volume) from last November was. It looked like a major pivot for Metabolix shares then, and what we've seen since then - like support at the stock's long-term, 100-day moving average line (gray) - confirms that the November swing was indeed a pivot.

Bottom line? It looks like it's time to take a shot on MBLX.

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