Want to see how an IPO trades? Check out how Aprea Therapeutics ($APRE) is working! (December 11, 2019)
APRE CHWY APRE
Just a quick follow-up on Aprea Therapeutics ( NASDAQ: APRE ). This is a biotech stock that I talked about yesterday in our Strategy Session for members. I mentioned that this was a stock that was poised to go higher.
We’ve had some really good success with other IPOs this year but this one is turning out to be a real monster. Full disclosure, I didn’t own this until, honestly, I think I didn’t own it until today. I had been thinking about buying it yesterday but then I actually took the plunge on a different stock ( NYSE: CHWY ) that was giving me some pretty similar price action with this bullish engulfing pattern and so I took a little flier on this. I am still long the stock all I did is add to it today and that’s it. With Aprea Therapeutics ( NASDAQ: APRE ), I saw first thing in the morning that it was up.
What I had mentioned yesterday was that I will just kind of walk you through it because we see this with IPOs all the time. This isn’t a see what I did video. This is a see what you can do in the future when you see these setups. This is where the stock had looked yesterday. I have just drawn a little line here, about $30.00; because even though the stock pushed above that a few times over the last couple of weeks it was quickly kind of trounced by sellers. I was looking at $30.00 as pretty solid resistance. But then yesterday the stock actually closed at 30.69 or we’ll call it 30.70. So it was up a little bit, it closed up I would say decisively above the $30.00 level and look at the volume over the past few days. That definitely made this a stock to watch first thing this morning, and then, boom, it breaks out right away.
This is the type of thing you want to have this on your watch list. You want to have alerts set on this type of thing because a stock like this, once it breaks out it’s breaking out and it’s going to go fast. Now, let’s look at this real quick and just get kind of a bird’s eye view or actually more like a satellite view. This is a stock that on the opening day of trading was the low of the stock. Typically, IPOs, at some point early they might run up initially but at some point they are going to come down and often undercut their initial entry where they debuted.
In this case the stock didn’t do that, it ran right up, trended sideways. And then I would say the first real buying opportunity; the first sign that the stock is going higher, at least the way I look at stocks is, here, so relative to the price range. I am not buying low I am actually buying high, I am buying at the all-time high right here under the assumption that a stock that continues to move up has institutional sponsorship, it’s got some buyers in there.
The stock moves up, once again, it drifts sideways, it’s a fairly illiquid stock so right here what I am looking at is a stock that is drifting sideways not down. A stock that is drifting sideways, which tells me that the buying has just dried up but there are not too many sellers. The sellers are kind of playing their cards close to the vest. The stock is trading sideways here and then, bam; it gets hit again with more buying. So just this, this, this, this, and this gives you a sense that there is some real institutional activity here. Now, the stock trades down here for a week or so. As I look at this it’s kind of tough to buy the stock at 30.00 and then a week and a half later it’s down at 22.00 or 23.00, that’s a pretty tough deal. But overall you have to even look at this and say the trend is still up.
The bottom line is, even with this sell-off, it’s not like you have got to buy this stock and just hold it through everything you can be managing your risk in other ways. But this sell-off here, when it finally did find a floor, this is just even more bullish. It just gives you more confidence that the move is up because buyers are in the stock. And so now, after just two days, two days of trading, the stock is up 36 percent in just two days.
So do I think that this stock is going higher? I actually do; I can’t say how much higher it’s going before it pulls back we can see the zigzags. But even if this stock does pull back, you know what? As long as it doesn’t undercut $25.00 or so, actually more like this, I am still looking at this stock as an IPO that is under institutional accumulation.
You can find stocks like this all the time. You can look at IBD, you’ve got leading IPOs and stuff like that, but I would suggest keeping a watch list with only IPOs in it. And then review that every day, set stops accordingly. Have a process for trading IPOs and you are going to find that some of your best trades, your most profitable trades will come through trading IPOs in my IPO strategy.
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