Looking at BioNTech ($BNTX) (July 13, 2020)
BNTX
I want to look at BioNTech ( NASDAQ: BNTX ), here’s why: This is where the stock was trading on Friday. Let’s just analyze this chart and then I am going to show you how we traded it during the opening rotation this morning.
First of all, I think this was Friday after the close; the company received a fast-track designation for a drug that they have that is for SARS. It is not specifically for COVID, though full disclosure, I am not a medical professional, I don’t know the specifics of it, I just know the market perceived it as a good thing.
If we look at the chart here you can see this thing really ramped in March. My bet is, that had something to do with the whole COVID thing too. But since that time, since that peak, this thing has traded essentially sideways. It’s been in a wide-range on a percentage basis. But on this chart you can see it’s almost 4 months. The stock had fallen back down and then was just kind of trading in this box.
Meanwhile, trading volume goes on. What I am talking about is this, you have got a lot of bulls here that bought right at the top, I couldn’t tell you why, and then this big slam here. So you have to assume there are a lot of folks that are trapped here that ultimately want their money back, that is what resistance is all about, that is what supply is. Supply is either profit-takers or in this case, there weren’t too many of those, people who bought higher and they are in pain and they want their money back. So these folks have had time while the market has rallied pretty strongly, they have had all of this time, 3 months, in order to liquidate these positions.
This is why I am saying that; because this looks really ominous here but we have got to get rid of that. We have got to get rid of that. We have to get rid of that because it really doesn’t matter anymore, not with respect to the amount of supply overhead. So this is really the chart that we are looking at, that puts this into play, right here, this big gap and crap. Late last month the stock gaps up, trades down, massive volume. I don’t recall what the news was, don’t care, that was then this is now, it doesn’t matter.
What we look at here is, the stock had broken out of a squeeze, let’s call it $55.00, it trades almost up to 80.00 that is a typical “sell the news” thing. So you are going to see a lot of folks selling and that is here. And who are they selling to? You know what? Probably the same people that bought back here, I don’t know. But they are selling to people who are buying the news; the stock gaps up 16 percent and so you will get traders that will say I have got to be first in the door because this is really, really good news so I need to get this stock no matter what. They will pay for a stock 16 percent up.
There will be plenty of shareholders and probably shorts too, that are happy to sell all they can. Because they know that this is short-lived supply, not that much money is going to pay that much of a markup for a stock. So once all of the bag holders get done buying all of the stock, the stock drifts down. So that is what our resistance level is right now, we will just put a line here. That is where our resistance level is on this stock from July 1st. And then time marches on, watch the volume here and then we get a big move up here.
So as I look at this today was actually the time to be buying this stock. Obviously, it would have been nice to have bought it back here but that’s, frankly, just not my style of trading, for various reasons, this particular stock.
This is what we did at Stock Market Mentor: This morning we were doing live a trading thing. Now you see this stock looks like, oh my gosh what a huge breakout, and it was for a day trade. But I had suggested that the stock gaps up here and then it drifts down. And so what we wound up doing was setting up an alert right up near the high, near the intraday high. This opening rotation high of $79.00; we set it a little bit lower than that because we wanted to get an early heads-up on the stock.
So once the stock trades back above this opening print, again, the opening is 78.47, so the entry here is actually 78.50. And the reason is, again, all of these folks that bought here on Friday, they are all winners, they are all winners. You look at the daily chart, all of these people now are winners, even the folks that bought at the top here, they’re winners. And so this is why people will trade a stock like this, but you can’t think what are people going to do? You have to think, what is the stock doing and what does that reflect in what people are doing?
So we bought some this morning; I am still in and probably will be in. Though, here’s the thing, the stock is up so much, almost 13 percent today, at some point you have to say well I will go ahead and take that money off of the table. But for the time being, we’re just looking at the way this stock is trading and it is actually doing pretty well. It is staying above the volume weighted average price.
And so this has turned out to be a pretty good trade. Where this ends at the end of the day, we don’t know. But first thing this morning this was a really nice move for at least 7 percent on this trade.
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