Corcept Therapeutics, Inc CORT - swing trading idea
The fundamentals
While a stock’s fundamentals are not of great importance in swing trading, it’s good we consider a little of it to get an overview of the situation in the company at the moment.
The company’s fundamentals are not doing poorly at the moment. With 115.558 million shares outstanding and trading at $18.96, the market capitalization is about $2.195 billion. The basic earnings per share (TTM) is $0.9970 per share, while the price per earnings ratio stands at 19.0 (not extremely overvalued).
The second-quarter earnings report released by the company last month showed that the revenue for the second quarter was $88.6 million, which was a 23% increase from a similar period in 2019 but about $4.7 million less than the first-quarter revenue — a situation the company attributed to huge preorders in anticipation of the lockdown. Also, there is some news in July about their medication in Phase 3 Clinical Trial.
Technical analysis
Now to the technicals, which is the main thing we are concerned about. Preliminary analysis shows that the stock just broke the former 52-week high at 18.52 to make a new 52-week high at 23.48. Not only that, but it is also now trading above the 200-day moving average after falling below the average on the 11th of August 2020. Let’s take a look at the price chart and the volume bars below:
September 3, 2020
On this chart, you can see the price action from September 2019 to September 2020. Notice that the price fell from the November 2019 high at 17.69 to a March 2020 low of 9.68, which coincides with the Covid-19 pandemic-induced bear market. It recovered, like many other stocks during this pandemic, and broke the resistance at 17.69, reaching a 52-week high at 18.52 in late June 2020 but couldn’t hold on to the new grounds. It was forced to make a pullback to around 12.20 before making another resurgence to the upside, breaking above the 52-week high at 18.52.
If you look properly, you would notice that the breakout occurred with a single, tall candlestick that engulfs all the price action in the pullback preceding it, and expectedly, the price was sharply rejected at higher levels probably due to profit-taking. But the bullish pressure is because the price is supported above the previous high.
Notice that the area between the November 2019 swing high (indicated with a pink line) and the late June 2020 high (indicated with a blue line) is acting as a support zone, so, as long as the price doesn’t fall significantly below that zone, the upward potential is still valid. Also, take note of the price swings. The swing low prior to the tall bullish candlestick was a higher low when compared to the one before it — as indicated by the dark-red trend line. The long-term trend line is also sloping upwards. So, there’s an overall uptrend.
Another supporting factor is the volume. As you can see from the chart below, the breakout occurred with a huge volume, which indicates that there is a significant market activity in the stock.
Now, coming to the indicators, you can see the 200-day moving average and the 50-day moving average, with the latter staying above the former. Notice that the 200-day moving average is slightly sloping upwards, confirming an uptrend, even though the price went below it during the pullback. So, the price climbing above it is an indication of the resumption of the uptrend.
Next, take a look at the MACD indicator; you will notice that the MACD line has climbed above the signal line, and the bars are above the zero line and increasing. The stochastic has also emerged from the oversold region and is climbing up. Both of these are indications of a possible bullish setup, especially in the setting of an uptrend.
While a stock’s fundamentals are not of great importance in swing trading, it’s good we consider a little of it to get an overview of the situation in the company at the moment.
The company’s fundamentals are not doing poorly at the moment. With 115.558 million shares outstanding and trading at $18.96, the market capitalization is about $2.195 billion. The basic earnings per share (TTM) is $0.9970 per share, while the price per earnings ratio stands at 19.0 (not extremely overvalued).
The second-quarter earnings report released by the company last month showed that the revenue for the second quarter was $88.6 million, which was a 23% increase from a similar period in 2019 but about $4.7 million less than the first-quarter revenue — a situation the company attributed to huge preorders in anticipation of the lockdown. Also, there is some news in July about their medication in Phase 3 Clinical Trial.
Technical analysis
Now to the technicals, which is the main thing we are concerned about. Preliminary analysis shows that the stock just broke the former 52-week high at 18.52 to make a new 52-week high at 23.48. Not only that, but it is also now trading above the 200-day moving average after falling below the average on the 11th of August 2020. Let’s take a look at the price chart and the volume bars below:
September 3, 2020
On this chart, you can see the price action from September 2019 to September 2020. Notice that the price fell from the November 2019 high at 17.69 to a March 2020 low of 9.68, which coincides with the Covid-19 pandemic-induced bear market. It recovered, like many other stocks during this pandemic, and broke the resistance at 17.69, reaching a 52-week high at 18.52 in late June 2020 but couldn’t hold on to the new grounds. It was forced to make a pullback to around 12.20 before making another resurgence to the upside, breaking above the 52-week high at 18.52.
If you look properly, you would notice that the breakout occurred with a single, tall candlestick that engulfs all the price action in the pullback preceding it, and expectedly, the price was sharply rejected at higher levels probably due to profit-taking. But the bullish pressure is because the price is supported above the previous high.
Notice that the area between the November 2019 swing high (indicated with a pink line) and the late June 2020 high (indicated with a blue line) is acting as a support zone, so, as long as the price doesn’t fall significantly below that zone, the upward potential is still valid. Also, take note of the price swings. The swing low prior to the tall bullish candlestick was a higher low when compared to the one before it — as indicated by the dark-red trend line. The long-term trend line is also sloping upwards. So, there’s an overall uptrend.
Another supporting factor is the volume. As you can see from the chart below, the breakout occurred with a huge volume, which indicates that there is a significant market activity in the stock.
Now, coming to the indicators, you can see the 200-day moving average and the 50-day moving average, with the latter staying above the former. Notice that the 200-day moving average is slightly sloping upwards, confirming an uptrend, even though the price went below it during the pullback. So, the price climbing above it is an indication of the resumption of the uptrend.
Next, take a look at the MACD indicator; you will notice that the MACD line has climbed above the signal line, and the bars are above the zero line and increasing. The stochastic has also emerged from the oversold region and is climbing up. Both of these are indications of a possible bullish setup, especially in the setting of an uptrend.