Take a second look at these biotech stocks — TKMR and BCRX (August 11, 2014)
I want to go through the stocks that I went through over the weekend; that’s Tekmira ( NASDAQ:TKMR ) and BioCryst ( NASDAQ:BCRX ). These are both stocks on the Ebola virus. First of all Tekmira ( NASDAQ:TKMR ), which seems to be directly on point. I had mentioned that I’m just as sympathetic as the next person to the disease, it’s basically deadly, one of many, and I’m looking at this as the chart, I’m not commenting on anything else. Shorting a stock that has a potential cure for Ebola is not shooting against the cure; you’re just trying to make money on the stock.
I’m not saying that you should short this stock, I would never want to short a stock that has gone from 14.00 up to 26.00 or 28.00 in two days, it’s just too hot, you can get crushed, there’s something going on and we know what’s going on. I had mentioned that I want you to be trading the chart, look at the chart, that’s what you’re trading. So we’ll see here on this 5-minute chart you can see how Tekmira ( NASDAQ:TKMR ) moved up and then drifted in towards the end of the day. It had a huge gap up this morning and is now well off of that.
What I would suggest is, I wouldn’t buy this stock, I’ll go back to the daily chart and show you exactly why in a second. If you are look at the intraday low here of 22.23, go ahead and take the stock here, keep your stop at 22.15 or something, keep it pretty tight; you “candlestickians” would look at this as a shooting star or a bearish triple wombat habachi, something like that. What’s really happening is the stock gapped up, it’s trading in a wide range throughout the day, but it’s actually drifting more towards the low.
I look at this, if we slap on three standard deviations, so you’ve got the Bollinger Bands where the outside bands here are three standard deviations instead of two, this stock is where it shouldn’t be, it shouldn’t be there, it should be lower. So you want to go ahead and take profits on this stock now; that would be my recommendation. I know some of you “Tekmirains” will stay long and that’s fine. The good news for you is you’ll get to add to your position at lower levels.
BioCryst ( NASDAQ:BCRX ), we’ve got a similar thing where here the stock gapped and crapped. It’s still up a little bit on the day, not a lot, but if we go look at the intraday chart here, on this you’ll see that this has been much more plain; the stock gapped up and never came close to staying there so now it’s just drifting lower. So whatever the future holds for these stocks is for somebody with a flux capacitor to figure out; I’m not that guy, but right now I wouldn’t be buying BioCryst ( NASDAQ:BCRX ), I would be hoping. Hope isn’t a method but sometimes it’s a trading strategy, hoping that this stock would maybe pullback a little bit more and then show signs of life.
One day’s little pullback or little intraday reversal does not a big correction make. What I’m saying is, my best case scenario frankly for BioCryst ( NASDAQ:BCRX ), because this is your trading catalyst, it would be a breakout, 14.62. If the stock gets above 14.62, hey, that’s your bogie, we’re going much higher. The other move would be say a pullback to the 50-day moving average, that is not the momentum trade, that’s the pullback in a stock that looks like it’s close to breaking out.
Tekmira ( NASDAQ:TKMR ), I don’t know where you’re ideal entry is on this, it’s just gone up so much, I would say this too, I’d say the same thing, the stock’s defying gravity, the high is 26.05. We’ll say if the stock goes up to 26.10 it’s a buy, because you’ve got all kinds of shorts that are freaking out on this; and also all kinds of momentum traders that are rushing to get in here. So that would be my trade on these. Other than those types of intraday quick trades scenarios, I think the upper Bollinger Band pretty much says it all; it’s not supposed to be up this high, I don’t think it will be.
Free Chart