Think you know how to trade Orasure (OSUR)? Oh sure you do. (June 27, 2017)
OSUR
I want to look at OraSure ( NASDAQ:OSUR ) here. The company reported that they have entered an agreement with the Bill and Melinda Gates Foundation, otherwise known as Microsoft Founder Inc., to make their self-test HIV kits available to patients in 50 developing countries. This is a huge deal for this company. They have already been trending higher anyway. The thing is, I think this stock could actually go further from here. I am going to show you how you can make that trade, or stay in that trade, with a very, very definite risk profile, a defined risk.
Here is the thing though, the stock popped out of this volatility squeeze on volume and then kept going, $16.00, it opened and then it just continued to move. Now, I wasn’t in this trade because I was prepping to teach a course on, coincidentally enough, The First Hour of Trading. So I was looking in other directions, but I saw this stock a little while ago and I thought, “I am going to show you how you can use some of the tools, that I taught in the course today, to stay in this trade.” This is something that you really need to know, here is the thing, the stock pops out of a squeeze.
Lets look at levels and see how we can figure this out real quick. Okay, what is this? These are pivot points here, 15.67, this little thing here, that is the middle line. What this is derived from is the prior day’s trading action. You take the closing price, add it to the low, and then add that the high, divide by 3 and you have got basically the middle point, the pivot point in this prior day’s range. And then there is resistance, port lines is calculated from that, it is actually pretty simple math but this isn’t a course on calculating pivot points. Also, seriously, lets not major in the minors.
We don’t need to know that because it is a software thing. You don’t need to make any adjustments. If you are on TC2000 it is easy enough, they have a pivot point indicator. Any other software you have will probably have a pivot point indicator too. Here is how you use it: We don’t care what the prior day’s pivot points were, the day before that, or the day before that. All we care is, what are the pivot points when the stock opens up? Because those are based on the prior day’s trading. So tomorrow morning, for example, when this stock opens up, none of this garbage will be here. It will all be centered around a pivot point that is created here, and it will take wherever the close was, that is right here at 17.30, add to that the low, which is 15.86, and add to that the high, which is 17.68. I just did the math here for you, the pivot point tomorrow will be $16.95.
Now here is why that is important, if we look at the way this stock trades intraday, this is how the stock was trading in the morning, popped right off of the pivot point and kept going. Within a very short period of time it was above the third resistance level, R3, and it just kept going. Volume was very strong, that was also a key indicator. So you can step on this stock first thing in the morning. In fact lets go down even quicker, right after the open. The stock gaps up, it keeps going. By the time it hits 16.25 this thing is in full-blown rally mode. The real volume doesn’t come in until a bit later and the stock just keeps on moving.
Now tomorrow, once it gets above this R3, as long as it (1) continues to move, and (2) is coming out of a volatility squeeze, it has got to be both of them, then this stock is going to continue to move. So you stay long. Now, you are long this stock already; in the morning, as I mentioned, the new pivot point will be 16.95. So the new pivot point will be 16.95, but you will also see these lines, the VWAP, volume weighted average price. You will notice, once the stock gapped up it stayed above the volume weighted average price, that is the orange line, and the moving average of the volume weighted average price, right here. And then towards the end of the day, as you would expect since it is a moving average, if the stock trades sideways for so long, this moving average is going to get right around with the price.
So tomorrow this is what I want you to do: I want you to stay long the stock. If you are not long the stock and you are looking to buy it I guess you could make the trade but you are kind of late. The idea is, how do you use this to stay in a trade for longer than you would? The idea is that the stock needs to stay above the orange line, that is the VWAP, volume weighted average price. The stock can come back to it, that is okay, it tests them all the time because it is an average price. But it can’t fall below the VWAP. So you stay into this stock. The stock will open up higher than this pivot point, it should unless there is some kind of weird news, it will open up there; you stay long the stock until or unless it falls below this VWAP line. And definitely if it falls below this pivot point of 16.95 you don’t want to be in this trade.
So you are staying in the trade. You keep a stop, 16.90, that is how we frame this trade, and it is a short-term trade. And I will say it again, this is an analysis intended to help you stay in if you are already in. You can take the new trade if you want but just know you are late. I have given you the pivot points. I have given you the levels, so this trade should work for you.
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