Weekly Breakout Candidates, 5th Edition
Welcome to the fifth edition of the Weekly Breakout Candidates. Although both the NYSE and NASDAQ markets were scanned this week’s list of results comprises exclusively stocks from the life science sector (as highlighted in a previous post) and listed on the NASDAQ.
Similarly to previous editions we are essentially looking for an array of positive technical indications such as a positive or rising relative strength, significant volumes of exchange, a positive long term trend (as identified by the 30-week moving average), and a potential or realized breakout on the price chart.
As for previous breakout scenarios investors should refrain from anticipating the proposed moves but intervene only when the breakout gets realized or a lower buying price area is reached.
This week’s selection comprises only companies with the potential to become super-winning stocks but with very technical configurations requiring non-conventional buying strategies:
- KURA ONCOLOGY INC.
- CELLECTAR BIOSCIENCES INC.
- INSMED INC.
KURA ONCOLOGY INC. – NASDAQ: KURA
Kura Oncology is developing life-saving medicines to advance a pipeline of precision medicines for the treatment of solid tumors and blood cancers.
The technical configuration is tricky since the stock price broke out above the descending blue resistance now turned support line with a massive increase of trade volumes and a relative strength turning positive vs. the NASDAQ Composite index but it still did not clearly broke above the red rising resistance line.
Nevertheless the technical situation hints towards a forthcoming move into higher prices and since there is no more overhead resistance the expected bull run should be massive although no price target can be defined.
– Buy 1/2 position in case of a setback below $12.
– Immediately place a stop-loss below the bullish long green weekly candle at $6.6 (low risk high loss).
– Buy 1/2 position when the price breaks above the recent price record above $13.8.
– Move stop-loss for the full position below the rising 30-week moving average at ca. $8.5 (medium risk medium loss).
– Further stop-loss adjustment will be required depending on the subsequent price action.
– Profit/Loss ratio: can not be defined yet.
CELLECTAR BIOSCIENCES INC. – NASDAQ: CLRB
Edit on 23 Sept 2017: The two gaps observed on the graph are in fact two reverse-stock plits of 1:20 on end of day – June 13, 2014 and 1:10 on en of day – March 4, 2016. For this reason the analysis here below is no longer valid and the data provider will be required to apply the corresponding splits so that we can reassess the price chart.
Cellectar Biosciences is committed to research and development of an innovative pipeline of quality drug products and by providing specialized cancer treatments.
The technical configuration is well… very technical. First, the price appears to be rising from a nascent supporting uptrend as highlighted on the yearly price chart (lower bottom quadrant). Second, the stock price gaped higher massively already two times in mid 2014 and beginning of 2016 and so far none of these gaps has been closed as highlighted by the horizontal blue lines. Third, the price is now compressed in a pennant (or contracting horizontal triangle) as depicted on the right part of the weekly chart. Fourth, every time the price corrected towards the lower trend line of the pennant the volumes of exchange have increased massively demonstrating elevated buying interest. Fifth, the 30-week moving average has now turned lower and a break below the lower triangle boundary can not be excluded. Nevertheless the odds are more in favor of a break higher towards the $5 area and on the longer term above it towards new record prices above $6 and that should unlock a massive upwards potential.
– Buy a break out above descending resistance line (which comes at around $2.2 for the week starting Sept 9th).
– Place a stop-loss below the last buying zone at ca. $1.39.
– Target descending resistance at ca. $5 for partial profit taking.
– Strategy should be reassessed from that level if reached.
– Profit:risk ratio (in case of total profit taking at $5): ca. 3.5.
INSMED INC. – NASDAQ: INSM
Insmed has a mission to develop novel, transformational therapies dedicated to improving the lives of patients battling serious and rare diseases.
As in the case of Cellectar here above the chart shows enhanced technical features with a break up above the descending blue line with humongous volumes and a strongly positive relative strength and that left behind a massive price gap induced by a recent public offering at a price of $28.5 per share. It is not obvious at all that the stock could hold that price level in a prolonged way and ideally a partial gap filling (but not closing) to the downside and in direction of the broken blue trend line / 30-week moving average could be expected, which would be an ideal situation to go long Insmed.
– Buy the stock if and only if price sets back below $20, better below $18.
– Place the stop-loss just below the top of the last candle ($13.30) before the gap up at $13.29 as it should be expected for the gap to remain unfilled.
– Target a move back up to the red resistance line corresponding to the public offering price at $28.5 (and later on above it).
– Strategy should be reassessed if scenario becomes realized.
– Profit:risk ratio can not yet be defined.