As the BioTech sector continues it's strong bullish move from mid June despite health care vote getting delayed this week, IBB and LABU (BioTech ETFs) seem poised to test their recent highs respectively. Let's take a quick look at couple of ideas in the BioTech sector along with one in Shipping that I'm looking into building a position next week.
Scenario - Positive Reversal Over $7 with Decent Volatility
Before we dive into each ideas, let's quickly take a look at the scenario I configured in BuySellShortCover.com to mine these ideas. Here are the filters that were applied.
- Price : Min $7
- Types : Us Equities Only
- Elasticity Reversal : Positive (means momentum has shifted and buyers are taking control)
- Flux : Min 4 (volatility)
- Past Berserker Spike : At least one spike over 8 in the past 30 days. We want to be in a stock that are actionable or have been in the past.
- Date : I've looked over multiple dates throughout the week to hand pick these three ideas.
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I will also be publishing this scenario in our Scenario Lab within the platform so anyone can easily clone this to their own repository.
EIGR - Eiger BioPharmaceuticals, Inc.
Fresh from making a 24% gains on Friday after announcing they've sold their non-strategic asset Mydicar® (rAAV1-SERCA2a) to Theragene Pharmaceuticals, Inc. The proceeds from the sales will help them to continue putting efforts in their proprietary pipeline. To gain further understanding of their pipeline consider this quick read.
Bear in mind, with BioTech and with the recent rise in stock price there is always a risk of a secondary or debt offering so something to be cognizant of and I recommend limiting your position size to reduce risk.
From a technical perspective, for the first time in 8 months or so Elasticity has turned positive in a massive way and cleared the near term resistance of $8.50. What we want to see in coming days is Elasticity to sustain being positive (above 0). If we don't open strong out of the gate on Monday to test $10, I'll be looking to build a position in mid $8 area with $7 as my risk. If we open strong and start clearing $10 I'll swing with a full position to ride this to $12+. Analysts have targets in mid to high teens but that requires positive results. My game plan is to swing trade with the momentum and not hold out for trial results.
Note that EIGR is scheduled to report early August so this would be 2 - 3 weeks position for me. EIGR also has a low float and if new buyers/day traders jump in next week, price can move higher very fast.
PTGX - Protagonist Therapeutics, Inc.
If you've never heard of PTGX before here is a quick highlight taken from this article.
- Many of the powerful drugs used to treat autoimmune diseases have to be injected.
- Protagonist Therapeutics wants to change that, instead of using the same approach but in a pill.
- The potentially game-changing approach could disrupt billion-dollar markets.
PTGX is a long way away from disrupting the billion-dollar market, however they got a $50 million in a deal with Johnson & Johnson's which could end up paying up to $990 million as if their drug makes progress through the pipeline.
There doesn't seem to be any recent significant news but the technicals are aligning perfectly. With a very low short interest and institutional ownership increasing in Q1 and Q2, I'm predicting that if the demand continues as it has in the past month and a half, we will see $17 in coming weeks. Good news/PR would certainly help accelerate the process.
I'm planning to build a poisiton between the $12- $14 range if there is a pullback and use $11 area as my risk. My first target would be around $17 to start taking profit in a few weeks and an optimistic $20 test in coming months. Recent Analyst's price target is between $30 - $45 but take that PT with a grain of salt.
Word of caution - I forgot to mention, this is a very thinly traded stock so I'm going to be taking a very small position if I trade it next week.
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NVGS - Navigator Holdings Ltd.
Navigator holding, which operates a fleet of liquefied gas carriers worldwide announced on Thursday about it's partnership with Enterprise Products Partners prompting the price to jump 30%+.
I think $11.50 is going to be a key hurdle as we saw on the following day after announcement where price gyrated between $10 - $11.50. Stock right now is in a profit taking zone and I plan to accumulate between $10 - $11 range next week and using $9 as my risk guidance.
Elasticity as you can see in the chart has turned positive and sustaining very nicely for the past couple of days. This tells us that the bulls are starting to take control of the stock now. My target is to swing this till early August before Earnings assuming this moves in my direction to test $14. I may or may not hold this till through earnings.
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Here are some more ideas that I didn't have time to study/research but had similar reversal patterns.
- DDD - 3D Systems Corporation
- BAS - Basic Energy Services, Inc.
- S - Sprint Corporation
- HEES - H&E Equipment Services, Inc.
That's it for now folks. I hope you found this blog post informational. Happy and profitable trading for next week.
Finally, If you haven't already tried the BuySellShortCover platform and you're interested in finding highly actionable trading ideas everyday like the ones in this blog post, sign up for an account at buysellshortcover.com. We're currently offering a 30 days free trial.
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Image credit - cftmarkets.com | disclaimer.
Additional Disclosure: I may or may not take positions in aforementioned securities in the future and this article isn't a solicitation to buy either of these securities but strictly for educational/entertainment purpose only. I or BuySellShortCover assume no responsibility if readers plan to buy any of the aforementioned securities. Readers bear responsibility for his/her own investment decision. Stock trading/investment can cause loss in capital and you should always consult a professional financial advisor. This article is an independent research/analysis on ideas generated by BuySellShortCover platform and not a paid promotion by any means.