A Real Money subscriber saw the overnight gains in Trillium Therapeutics (TRIL) and wondered if he could score a home run with Cardiff Oncology (CRDF) . Let's check the charts of this a clinical-stage company looking to develop new oncology therapeutic options for cancer patients.
In this daily bar chart of CRDF, below, we can see that prices made a sharp year-end rally into early January 2021, but have since slipped lower and lower giving back the entire rally. Prices are trading below the declining 50-day and 200-day moving averages.
The trading volume has been extremely low telling us that traders are going somewhere else for "action." The On-Balance-Volume (OBV) line shows a slow decline from October and suggests that sellers of CRDF are more aggressive. The 12-day price momentum study shows higher lows from January telling us that the pace of the decline has slowed. This is a long bullish divergence, but it has not translated into a rally.
In this weekly Japanese candlestick chart of CRDF, below, we can see that prices made a saucer bottom pattern in 2019 and 2020 that preceded its run up to $25. Prices have given back a significant part of the rally. CRDF is trading below the declining 40-week moving average line. The weekly OBV line has been in a slow decline from October 2020.
The 12-week price momentum study shows a bullish divergence this year, but like the daily chart it has not translated into a rally.
In this daily Point and Figure chart of CRDF, below, we can see a minor upside price target of $6.
In this weekly Point and Figure chart of CRDF, below, we see that the software is projecting the $1 area as a price target.
Bottom line strategy: Chart readers could make the case that the charts of TRIL were bearish just the other day, but that did not stop a huge upside gap from happening. Could CRDF gap higher on a surprise take-over bid? On Wall Street anything can happen, but I do not see lightning striking twice.
