Bottom Fishing

lauralea Updated   
NASDAQ:SRPT   Sarepta Therapeutics, Inc.
Some of the biotech industry seems to be recovering after most suffering a long hard fall.

SRPT gapped down, way down, did the dead cat bounce dance and regained a bit only to form a symmetrical triangle that broke to the downside. Then a descending triangle and has fallen down from each triangle the designated amount but could fall further. The low during these scenarios was 68.04 which is less than the 3 year low. Some support noted at 67.04.

The dead cat bounce is an event pattern as a rule, be it bad earnings or bad news related. Price makes a dramatic drop in a daily swoop down averaging 15 to 30%. Price bounces up, then resumes the downtrend. Biotech is among the top contenders to have a drop down of this magnitude. The semiconductor industry, internet stocks and alternative energy are all on the list among of those more likely to gap down significantly. Utilities, housegold goods and the defense sectors are among those least likely to gap down to this extent.

The bollinger bands are contracting, so a move one way or the other is to be expected.

No recommendation.

Being a bottom dweller can be time consuming )o: Some stocks gap down and can actually be a good buy, and it will improve the odds if the gap down day candle ends as a doji or a bullish candle. Utilities rarely gap down to this extreme, but not to say they do not ever do it. Homebuilders are among those that can gap down like this, but this sector is more likely to recover without further decline than other sectors according to statistics.

When a stock gaps down, taking a look at the volume bar that sent it down can also help.
Earings 5-5 amc

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