A Biotech stock I had been watching for quite some time is DRTX – Durata Therapeutics. I decided to put in a stop buy order in case the stock was able to print a new all time high and take out long-term resistance. Sure enough I was stopped into an initial position the very next day. Printing an all time high is bullish behaviour in and of itself. There is no need to second guess too much. From a psychological perspective it is really easy to sum things up: Everybody is showing a profit. Nobody is feeling any kind of pain associated with holding that stock in their portfolio. There is no overhang, no need to sell in order to break even. In plain English: There is no selling pressure. Although this is a really simple concept, experience shows most market participants have a tough time grasping that concept.
- A new All Time High means: No overhead resistance. No selling pressure. —> Blue Sky Potential
As indicated in my chart annotations these are the two most likely bullish scenarios I see unfolding. If either of these two scenarios plays out I will get stopped into the stock another time in order to increase my initial position. The way I see it the stock shouldn’t trade below the 10$ level anymore as the bullish momentum and the new ATH should provide additional buying pressure going forward. A stop loss could be placed below the 10$ level to protect one’s capital.
Durata Therapeutics is a pharmaceutical company focused on the development and commercialization of therapeutic solutions for physicians and providers to advance patient care in infectious disease. Durata has completed its DISCOVER 1 and DISCOVER 2 global Phase 3 clinical trials with its lead product candidate, dalbavancin, for the treatment of patients with acute bacterial skin and skin structure infections, or ABSSSI.
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