Thinking about trading Serepta Therapeutics (SRPT)? Think you have what it takes?? Here’s your plan. (September 20, 2016)
SRPT
Sarepta Therapeutics ( NASDAQ:SRPT ) was up again yet today. Now, yesterday the big deal on this, and we had members in the forum talking about this stock quite a bit, and again today. But the big deal was the FDA approved a muscular dystrophy drug. It is going to be super expensive, apparently like $300,000.00 a year, though discounts are coming. We can get the tap dancer from Mylan, who is testifying before congress, to show us how to do that. That will be a one-time deal. Nice to be connected. But the deal is with Sarepta ( NASDAQ:SRPT ), this was obviously a huge surprise to the market, AND to those fine folks who had shorted about a third of the float. So this is a stock that is obviously up huge on this news. And the news, in turn, has the shorts scrambling for cover. But hey, no problem. I am short the stock. It looks like maybe the run is over. I am going to hang on to it, wait for it to pullback. Not so much. The stock is up another 14 percent today.
So here is what I am telling you: This is a massive short squeeze. DO NOT under any circumstances short this stock. I think it is just going to stop moving higher, at least move sideways for a bit. I would think that. And the reason I would think that is because the stock has almost doubled in two days, so of course we are going to think that. But are you going to place that bet? I wouldn’t do it. I wouldn’t do it, that is about as silly as shorting Tesla ( NASDAQ:TSLA ). You want to do it. You know the stock is ultimately going to be lower, but it does not trade logically. So with Sarepta ( NASDAQ:SRPT ) just remember, huge short interest, the stock is breaking out and moving higher. Oh, volume is less than half of what it was the prior day. Yes, but it still printed a higher low, gapped up, and hardly moved down at all.
So what do you do now, other than NOT shorting it? Okay, if you are long, stay long. Here is your stop. You can use just a little under 51.95, so you keep your stop, we’ll call it 51.63. As long as the stock continues to move HIGHER you want to stay long. But as soon as the price falls BELOW the prior day’s intraday low, and that here would be 51.95. If the stock falls below the prior day’s intraday low then the risk of further declines is substantial; just because your price is telling you selling pressure relative to buying pressure is greater than it has been. Now, this is a volatile stock so it could very well wiggle around a little bit, but I am just saying, as a trader you want to look at those type of things and have an objective reason, an objective exit. Now if we look at the 15-minute chart you can see exactly what is happening. It is a little bit easier, you could even set your stop, if you are really trading tight you could set your stop down just a little bit below here, right about there. So there are a few different ways that you can trade Sarepta ( NASDAQ:SRPT ). The main deal is this, you have two options: (1) Sit and watch the fun. (2) Get long with a tight stop. Fade the stock. (3) Short the stock, no. Door number 1 or door number 2. You don’t want door number 3.
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