AVI BioPharma, Sequenom, Inovio Biomedical, and CytRx Corporation all close to making a major move higher.
By James E Brumley
Despite the market being in the red on Monday, most the biotech industry's stock seems to be doing just fine. In fact, CytRx Corporation (NASDAQ:CYTR), Sequenom, Inc. (NASDAQ:SQNM), AVI BioPharma, Inc. (AVII), and Inovio Biomedical Corp. (NYSEMKT:INO) look like they're all lining up to be the group's best breakout candidates. Here's a closer look at each biotechnology stock's chart, and what it may tell us about the near future.
Oh, and just to be clear, these four picks aren't necessarily the sector's hottest over the last few weeks. In fact, none of them looked overly-healthy earlier in the month... that's the point. Our search is for the next big winner, not the prior big winners.
It was only a couple of weeks ago that AVI BioPharma, Inc. (AVII) looked like a complete disaster after the company raised $35 million dollars by selling more common stock.... salt in the would after reporting that Q2's loss was bigger than the loss taken a year earlier.
Now, it appear the market thinks its treatment of AVI BioPharma has excessively harsh. Following the August 29th bearish gap, we've seen nothing but upside from AVII shares. Today's high-volume move is the strongest re-accumulation we've seen since then.
Though the company's MD treatment is only on Phase I, AVI BioPharma offers something many other biotech companies can't.... real revenues right now. They may not be great, but between the pipeline and current revenue-bearing projects, investors could do a lot worse than AVII.
Our near-term target is a return to the $2.50 area.
Following the big gap up from late July, Inovio Biomedical Corp. (INO) shares were highly vulnerable to a pullback. That worry was legitimatized by the gradual decline we witnessed from INO in early August. Over the last four trading days, however, we've seen this stock make higher lows, and we've seen an attempt to make higher highs. Has the big gap-closing pullback been staved off?
It's still too soon to call this a breakout yet, but something can be said of INO that can't be said of most other biotech names - it's not overbought right now.
The line in the sand is the ceiling around $2.34. If that line cracks, the Inovio Biomedical are apt to gear up for round 2. It will take a little more volume than what we've been seeing recently to make it happen, but INO is still one of the stronger biotech breakout ideas on our radar.
No target price; just keep tabs on it.
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The pullback from CytRx Corporation (CYTR) in late July and early August may have been just the dip would-be buyers needed. After hitting a low of 84 cents on the 17th, we've seen higher highs and higher lows - generally - from CYTR shares.
The technical signal here is a bullish MACD crossover. This indicator isn't often successful or helpful, but has a solid history when it comes to trading CytRx Corporation. The fact that the cross occurred while the MACD lines were under zero carries even a little more weight, in that is suggest a full 'reload and relaunch' for CYTR shares.
The catalyst for the buying has been positive data so far on a stroke drug. The research has only involved animals so far, but that's a positive situation for the stock - it leaves much more good news to be released in the future. In fact, the best thing CYTR share shave going from them is a pretty robust CytRx Corporation pipeline.
We're not setting a target price for CYTR either, as the April/July rally far exceeded anyone's expectations. Just ride the trends as long as it lasts.
And finally, Sequenom, Inc. (SQNM) is back on our radar after a bit of a hiatus.
You may recall Sequenom was the company that goofed up its Downs Syndrome screening device by using errant data in its testing. SQNM plunged in late April as a result, but shares have been recovering ever since. Why? The bad data doesn't inherently mean the device doesn't work - it just means somebody made a bonehead mistake.
Anyway, the modest move higher from Sequenom has come in ebbs and flows, framed by a rising set of support and resistance lines. Trading those lines (selling at the high and buying at the low) has been reliably profitable. More importantly, SQNM just pushed up and off the lower edge of the range.
Our near-term target is the upper edge of the range, currently at $8.22. The hope, however, would be for that ceiling to break down and eventually let Sequenom shares fly. First things first though - we want to build a little profit cushion using the pattern we know is in place.
If you'd like to know when or if we issue trading alerts specifically for CYTRX, INO, SQNM, and AVII, then be sure to subscribe to our free e-newsletter. It's delivered two to three times per week.