NEW BEARISH Plays
Puma Biotechnology - PBYI - close: 39.11 change: -3.31
Stop Loss: 41.25
Current Gain/Loss: unopened
Entry on October -- at $--.--
Listed on October 30, 2013
Time Frame: 3 to 6 weeks
Average Daily Volume = 226 thousand
New Positions: Yes, see below
Why We Like It:
PBYI is in the healthcare sector. The company is a biotech firm focused on cancer treatments. The stock has had a terrible month of October. Shares fell from $55 to $40 in just two days on October 8th and 9th. Oddly enough I can't find any news to explain the sell-off. The oversold bounce failed at resistance near its August low so shares are trading very technically at the moment. With that in mind today's display of relative weakness (-7.8%) produced a bearish breakdown below support at $40.00 and support at its simple 200-dma.
Before I continue I want to caution readers that this is an aggressive, higher-risk trade. Not only is PBYI a volatile stock but it's a biotech and biotech stocks carry an extra risk. You never know when a headline might come out on some clinical study or FDA approval process that could move the stock sharply overnight. Furthermore PBYI does not trade a lot of volume and I can't find its next earnings announcement date.
I am suggesting we launch small bearish positions if PBYI trades below the October 9th intraday low of $38.94. We'll use a trigger at $38.75. If triggered our target is $31.00. More aggressive traders may want to aim lower since the Point & Figure chart for PBYI is bearish with a $20 target.
NOTE: You could try and limit your risk by buying put options instead of shorting the stock but the option spreads are wide thanks to PBYI's volatility.
Trigger @ 38.75 *small positions*
Suggested Position: short PBYI stock @ (trigger)