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SA Editor Douglas W. House
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Healthcare sector investor and analyst for over 20 years.
  • Organovo: Encouraging Chart Action 0 comments
    Jul 13, 2013 12:09 PM

    On Tuesday morning prior to the start of the trading day (July 9) ONVO issued a press release announcing its listing on the NYSE MKT exchange effective Thursday, July 11. As ONVO followers know, this was one of the firm's near-term objectives disclosed by the CEO, Keith Murphy, in his road show presentation.

    The market responded with quite a bit of enthusiasm. The share price increased 26% closing at $4.92. Trading volume ballooned to 5.1M. The bullish action continued through today delivering a closing price of $6.01 on turnover of 3.2M shares. Share price performance for the four days was an increase of 54% driven by an average daily volume of 3.7M. Average turnover increased an eye-popping 1374% versus the 10-day average of 251k shares.

    Here's the chart:

    (click to enlarge)

    On a purely technical basis, this move is bullish. The price broke through resistance with authority on a massive increase in volume. Index and sector funds would not buy in these numbers so institutional support appears to be the main initial driver. Also, based on my own experience, when the three indicators I use are all "on go" (MACD > 0; ADx - DI+ > DI- with widening jaws; CMF > 0) they confirm the quality of the breakout. This is normally when I pull the trigger on a trade.

    Next week's action will also be an important indicator of the quality of the breakout. If the price doesn't look back then I would set an initial target of $10. If the price stalls and closes below $6, then the trade will probably take more to develop. If the price closes < $5, sell it and wait for a valid re-entry point (assuming a basis of $6/share).

    This one is going to be a roller coaster so hang on to your hat.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ONVO over the next 72 hours.

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