I hate to turn BestOnlineTrades into a ‘one trick pony’ for the next couple of weeks, but I may spend a lot of time covering CTIC Cell Therapeutics in a multi part series. I will still cover some other topics as well, but I would rather focus in like a laser on CTIC and see what can be learned about its behavior and possible outcomes.
The chart of CTIC is notable for several reasons. It clearly has a solid uptrend with very respectable advancing volume since the March 2009 time frame. So it has shown us a clear sign of strength off of a major bear market bottom. This is important because it helps to give added probability for possible future price direction.
Also notable is the fact that CTIC has consolidated sideways for roughly 3 and a half months AND it has not given back too much in the way of price. In other words, price has held relatively firm during the consolidation instead of slanting down or going into a deeper retracement.
The price of CTIC has now entered well into the apex of this large symmetrical triangle and there are 3 possible outcomes going forward.
- CTIC creates a buy signal by travelling into the green shaded area (1.70 or higher)
- CTIC creates a sell signal by travelling into the 1.44 area or less.
- CTIC continues still farther out into the apex and then just goes sideways or drifting with no clear direction or decisive move.
Any one of these three scenarios is possible. I cannot predict exactly which one it will be. Now I could say that I have a slight bias that the outcome will be bullish because the previous trend has been bullish and as I mentioned at the start of this article, the price has not given too much back during its corrective process.
Another element to the CTIC scenario is that there is potentially a forward looking event about 6 trading days from now. I have no clue whether that event will be positive or negative for the stock. But I can tell you that the price should at least provide some clues in advance based on how this entire chart is structured. I am going to have to look a bit more into this forward looking event and report back here my findings. I don’t want to talk about it until I know some more details about it yet.
The broad market for the most part is still cooperating. There could be a big swoon down the next two weeks and that could affect this stock, but for now the SP500 is range bound and I am not too concerned about it affecting CTIC in a measureable way yet.
The last point I want to make about CTIC is that it is with zero doubt a biotech stock. Biotech stocks can be a real pain sometimes because they tend to have lots of gaps and spikes but then quick reversals and many times intraday reversals.
It is very clear from looking at the past behavior of CTIC that the upward breakout spikes have lasted only from 1 to 3 days. Assuming CTIC gets an upward type of breakout, holding it for more than 1 to 3 days in my opinion would be a very bad idea.
I should also mention that there is one price swing, the one that occurred on July 23rd that causes me at least a little bit of concern. It was a big down day within this triangle and it was on 68 million shares. It sticks out like a sore thumb and it was not really tested. So it is in the back of my mind, but not the end of the world.
Ok, so this concludes part 1 in a series of X postings (not quite sure how many follow ups on CTIC yet) on CTIC.