NEW BULLISH Plays
Sarepta Therapeutics - SRPT - close: 29.03 change: +0.51
Stop Loss: 28.85
Current Gain/Loss: unopened
Entry on February -- at $--.--
Listed on February 26, 2013
Time Frame: Exit PRIOR to earnings on Mar. 7th
Average Daily Volume = 1.0 million
New Positions: Yes, see below
Why We Like It:
SRPT is a biotech stock that seems to be ignoring the action in the broader market. The sharp market declines this week and last week did not have much impact on the stock. That might be because investors are waiting on new headlines from SRPT. Back in October the stock exploded higher on positive phase 2b trials for its Eteplirsen drug. Since then shares have been consolidating sideways. The consolidation has started to take on a bullish bias with traders buying the dips at the rising 100-dma.
Trading biotech stocks can be very dangerous. The wrong headline could send the stock gapping lower. Just look at what happened with Affymax (AFFY) yesterday with its -85% plunge. Now AFFY's problem yesterday was not an FDA rejection letter but the FDA news is part of the risk with SRPT.
Investors are expecting to hear news from SPRT regarding its meetings with the FDA this year. The wrong headline and SRPT could crash. The other side of that coin is that the right headline and shares could soar. The most recent data listed short interest at 17% of the small 23 million share float. That's definitely enough to fuel a short squeeze.
You could always consider buying call options to limit your risk but the options on SRPT are super expensive right now. I would avoid them.
Tonight we are suggesting small bullish positions if SRPT can trade at $30.15 or higher. If triggered we will aim for $34.75. More aggressive traders could aim higher. Remember, this is a higher-risk trade. We want to keep our position size small.
Trigger @ 30.15 *Small Positions*
Suggested Position: buy SRPT stock @ (trigger)