“You never know” Case Studies

Trading is a hard business because you are dealing with uncertainty and lots of times when the market is in bad mood, you never know what lies ahead. Let us look at few case studies to understand it.

Cara Therapeutics: How things can go wrong just like that? 

The stock made a big gap-up move early in April on news that the stock has been added to the S&P SmallCap 600. This itself does not change the fundamentals of the company and hence I ignored the gap-up move but the stock was well-positioned to rally around the end of April from the Gap up support price of $26.

Biotech stocks are just one step away from terrible news. The company announced results from its phase 2 study evaluating oral Korsuva in treating moderate-to-severe pruritis in patients with atopic dermatitis. The drug failed to achieve the desired results and before you know it, the stock crashed even without giving any exit opportunity.

BTX Brooklyn ImmunoTherapeutics – Then Biotech stocks move like this too

CARA stock was a great example of why one should avoid Biotech stocks but BTX is another example of why traders trade such lottery stocks. BTX made a new high above 13 and I could not figure out any compelling news but what happened thereafter was just mind-boggling. The stock rallied to $80 🙁

MUDS – The Spac that worked

SPAC Special Purpose Acquisition companies have become a bad name. So, when MUDS Mudrick Capital Acquisition came along as an opportunity, it got purposely ignored. Now looking back it was a bad trade to ignore as the stock made a 50% textbook move. Here’s how it happened:

This was the news: Topps, the company that has been making baseball cards for 70 years, is going public in a SPAC transaction valuing the company at $1.3 billion. There was a gap-up move which later got consumed by minor selling but then the stock took off and never looked back. The bounce was a buy after an initial pullback. It’s painful because I considered it but gave it a pass because SPACs were not doing well.

XXII 22nd Century Group – The Gains disappear in no time

22nd Century Group XXII is a leading biotechnology company focused on tobacco harm reduction, reduced nicotine tobacco, and hemp/cannabis research.

I like stocks with a strong story behind them, so when XXII popped up on my screen on news that the Biden administration is planning to ban methanol flavored cigarettes and planning to limit addiction, I added it for momentum. XXII stock made a move and it was a good 50% rise in the stock which it quickly gave up, thanks to the current nature of the market.

The story has not disappeared and hence one can hope, again hope that the stock will make a comeback again. Again a bad news from FDA can crash the stock, so you never know

Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers