When great news creates a “gap and crap”, it pays to avoid the stock. Here’s your trade on Intrexon (XON) (August 08, 2016)
XON
We’re looking at Intrexon ( NYSE:XON ) here. Intrexon ( NYSE:XON ) owns Oxitec, Oxitec is the company that has that genetically engineered mosquito that kills mosquitoes that have Zika, basically by decreasing their lifespan. It comes out over the weekend, the FDA approves it, and this and that. Great! The stock gaps up almost 5 percent and then immediately takes a dump here. So what do we have? For one thing we have two inside days, which is Friday and Thursday the stock traded completely inside what today’s range was, which has gapped right up to the 200-day moving average, where it’s kind of been a time or two before, always with bad results for those who bought the little ‘pokey’ here. They bought the little peak right above the 200-day moving average. It’s been there before, and then it trades down. So even though you look at this stock and you say, “Wow! It lost almost 6 percent today.” No it didn’t. It didn’t lose 6 percent today. From the top, when all the lemmings bought, it lost over 10 percent today, from top to bottom. You buy in the morning, by the afternoon you’re looking for a genetically engineered mosquito to take your stock away from you.
My point is this: When a stock gaps up like this on “good news” and then trade lower on volume, this is a stock that you want to avoid like the plague. Now, if this ever starts trading ABOVE the 200-day moving average. OR, trades back down here, kind of into this range, here’s the trading range, so it’s broken out above there. If it starts to trade back down in here, then you can buy this stock kind of on ‘the come’ just own it and then wait for some kind of positive direction. But honestly I thought that the stock would breakout. It didn’t. Almost 30 percent of the float is short, so it seemed like a recipe for a squeeze, to me. That didn’t come to fruition either. So there’s a lot of stuff that could go right with this stock, but none of it has really happened yet. So this is a stock, I would be looking to avoid this stock until it starts moving above 30.00. And if it does start moving above 30.00, you better be quick.
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