Let’s check in on our old friend, Esperion Therapeutics (ESPR). Nice flat pattern….nice profit potential. (By the way, I mistakenly said that JPM had upgraded the stock. Wrong! It was JMP Securities). Different firm…same pattern. (February 16, 2017)
ESPR
I want to look at Esperion Therapeutics ( NASDAQ:ESPR ). Now, some of our members have been doing really well on this. To refresh your memory, this is a biotech company, that when it was trading back down here JPMorgan ( NYSE:JPM ) put a $41.00 price target on the company. They just thought it was totally misspriced for what it does, which is treatment for cholesterol and other cardiac issues. The stock just screamed higher; 25 percent of the float is short. You can see, there was like no volume on this stock; 100,000 shares here and there and then out comes the report and here you go. So this huge volume.
The way you really want to look at this (you can go back, I am pretty sure I talked about this is in a Free Chart video a little while ago), you have to put a trailing stop on this. But when you see that kind of a huge target up here in the 40.00s. You pretty much know the stock is going to move higher. An analyst at JPMorgan ( NYSE:JPM ) isn’t going to make a call like that without there being some kind of buying interest behind it. That is how you get fired, that is how you build the list of clients for Goldman Sachs ( NYSE:GS ). Anyway, the stock keeps moving and now it gets up to $20.00 here and you kind of expect it maybe to rest at this level.
So here, this takes us to Monday. This is a stock that has ramped from lower to higher, about 50 percent. Yet it is still holding $20.00. You know what the call is. The call is for much higher prices. You don’t just want to pile in here, but you can be buying this stock with a fairly tight stop. And by the way, if you are already long this stock, you have had a nice ride, don’t sell it. Put your stop on a part of your position at $20.00, and then maybe put a stop on the rest of your position at 19.00 or 18.50, something like that, so that you are able to stay in longer while still protecting your profits. Okay, so this takes us to Tuesday and then Wednesday and finally we get a continuation. So you have made the money on the first part of the run. You have kept the money or maybe taken a small profit here. And then you have still got an open position going, and then you just hang on to that.
Now you are sitting here going, “Dan, what if I didn’t make this trade?” Okay, I will help you out with that too. This stock still has room to run. This is a little bit sloppy, but you can call this a flag pattern. A breakout in an almost vertical way, about a $2.00 price range here, between 20.00 and 22.00. So lets call this a breakout from $14.00, runs up to 22.00 so that is an 8 point move. And then you take this 8 points and you add that to the top of the range, which is 22.00. So it has moved 8 points, consolidated for a couple, broken out above 22.00, assume 8 points, that takes you right up to $30.00. That is where your price target is on this stock. You start a little position tomorrow. It is kind of tough to be buying up here and have a stop clear down at 19.80, 19.90 even, but the stock could pullback that much. I would say you take a small position tomorrow. If the stock starts trading up above 24.00 take a bigger position, just start scaling in. And then if the stock hits 30.00 you definitely want to start selling some at that point, just as a nod to the gods of technical analysis.
Free Chart