Check out this squeeze play on Aurinia Pharma (AUPH). (September 07, 2017)
AUPH CBOE CME
I want to talk about Aurinia Pharmaceuticals ( NASDAQ:AUPH ). If you look at charts at all you can see this is a really, really nice squeeze. It is coming out as, what I would look at as, a multi, multi-month base. Biotech stocks can always be choppy. This thing had this big massive move and ever since March it has just kind of been repairing. Just kind of working off that excess and now just starting to move higher. If we get rid of all these big volume bars here you can see the real activity started here. A big move higher, I would say this is our Phase 1 breakout, breakout from a squeeze. Phase 2 is the pullback. And then Phase 3, if a Phase 3 happens at all, and it is here, is a breakout above the intraday high from wherever the stock initially broke. So we are looking at this is the first day, second, third, fourth, and fifth is the continuation day. So this is a continuation of the move that started back here on the 31st. This thing could have some legs.
The way you trade this is, and because it is a low-dollar stock and it is kind of a fast mover, you need to have a little bit wider stop, at least than I like on an initial purchase. So you can buy this stock here at 6.90. If the stock falls back just into this cluster, into around the 6.30, 6.25 you don’t want to be long the stock because it is a fakeout. Look at what happened here: We got the same type of deal, a big break and then ultimately the stock moves down over 20 percent. So you could be getting the same thing. But I think at this point, the way this stock is trading, as long as it has been moving, I think it is fine. And the 50-day is starting to trend higher.
Now, one thing I wanted to mention on a similar vein, yesterday, I think I featured it in the Chart of the Day, that CME ( NASDAQ:CME ) was also looking like it could be breaking out. My suggestion was to wait because the company went ex-dividend today, they paid a 66 cent dividend. The stock had been trading down a bit and my suggestion was wait to see the stock open and then you want to see it start trading to new highs. Sixty-six cents is not a big dividend, it is not like everybody is buying CME ( NASDAQ:CME ) so they can get 66 cents. Not going to happen. But it is something that impacts the stock price and so you want to watch it.
Here is the point: We get a perfect setup here. This looks really, really good and a breakout above this level, that brings in 140.00, 150.00, this has been a long consolidation just like Aurinia ( NASDAQ:AUPH ), it is a different pattern but the same consolidation. This brings in much higher prices if the stock breaks out. But to say, “Oh! The stock is going to break out, I am going to get a head start on it.” Well, now you are not feeling quite so smart because the stock is down. I will give you the same setup, don’t do anything on this stock. If the stock starts trading up above 128.00 then go ahead and consider buying some. But right now we are still in no man’s land and that means that it is kind of dead money. I would rather buy the stock at 128.50 than buy it at 125.74 because at least up here I know it is on the way up. Here, I just think it is still in jail.
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