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Kalvista Pharmaceuticals – New portfolio entry

Weekly Breakout Candidate

This week one single stock stands out during our market scan and it is Kalvista Pharmaceuticals Inc. (NASDAQ | KALV) with a combination of massive volume increase combined with a breakout above the historical price record at $10.65. The previous week was a failed attempt to break out but the last weekly close is a  confirmation move which should portends significant upside potential.

2017-10-22_Kalvista

Kalvista Pharmaceuticals Weekly Price Chart

Kalvista Activities

The company describes its activities as a pharmaceutical company focused on the discovery, development and commercialization of small molecule protease inhibitors as new treatments for diseases with significant unmet need.

Recently a partnership with MERK (Merck & Co Inc. | NYSE) was announced, which certainly is a positive fundamental development supportive of higher stock prices.

Strategy

  • We will enter KALV in the portfolio with a limit buy order with a limit price of $11.5 placed before the weekly market open (this means we will buy at any price not higher than $11.5).
  • No stop loss order will be placed until at least the next weekly close.
  • No target can be defined for this trade.

 

3 Comments

  1. KALVISTA buy order has been activated at $11.5 as proposed and it is now part of the portfolio.

    Reply
  2. Thank you for the info,

    Are you concerned about the recent price action, testing resistance and do you have a stop loss price?

    Reply
  3. You are right, I did not update this position with a stop-loss level. Fact is, I also have this stock in my private portfolio and with a worse entry price of $12 than suggested to my readers (I tend to lack patience and anticipate price moves). I usually take my decisions to stay in an equity trade or to close my position on a weekly close basis and it is actually difficult to provide a precise stop level at this stage for KALVISTA due to the high price volatility.

    I took a closer look and used my IB platform on which I have a longer price history for the stock and identified the following interesting monthly set-up:

    Kalvista Monthly Price Chart

    Both fundamental and technical reasons combined make me not worry too much as they both combined into a rationally strongly bullish view. Technically speaking the price is supported by the 7-period moving average (blue arrow on the chart) at approximately $8.5.

    I would not be surprised to see the price spiking temporarily below $9 and will certainly hold the shares in my portfolio as long as the price does not close below this moving average. I do not expect the $8.5 level to be violated even temporarily as it is a strong support for the price.

    Let’s wait for one more week and the monthly close will be quite instructive. Don’t hesitate to remind me by then for an update.

     

     

    Reply

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