• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

An Example of How I Stalk a Trade

With Aurinia Pharmaceuticals, the key is to be patient and to buy incrementally.
By JAMES "REV SHARK" DEPORRE
Aug 10, 2019 | 10:00 AM EDT
Stocks quotes in this article: AUPH

Although I trade in a variety of time frames, the trades that produce the best returns are those that develop over the course of weeks or months. The strategy I use can be applied over a shorter time frame but typically if you are looking to play news flow it will require some patience.

One stock that I'm stalking is Aurinia Pharmaceuticals (AUPH) . I've mentioned this a number of times in the past as I like the fact that they have two drugs with big potential. One is for the treatment of dry eyes and had surprisingly strong results earlier this year. The second is for the treatment of lupus nephritis and has a significant commercial market.

Aurinia is set to release Phase 3 results of the lupus drug probably around November. The exact date is not known at this time.

I believe that at some point market players are going to start anticipating the news. There is a tendency for stocks to be run up as that news approaches and that is where the potential lies.

AUPH sold off on Wednesday following its earnings report. There wasn't any significant news and there is nothing that changes the situation with the lupus drug. It was simply traders selling in reaction to a news event without any regard to the news. Price action of that sort scares those that don't know much about the stock and they then avoid it which helps to offer a better opportunity.

I currently hold a position in the stock and will be looking to add to it as it develops further. The chart looks very poor right now as it has fallen out of a long trading range in response to earnings. I don't think that is meaningful and don't view it as predictive, however I have been wrong about such things before.

The key to this trade is to be patient and to buy incrementally. I'll leave plenty of room to add to the position over the next 60 days and then will start to look to average up when there are some signs that there is interest in the potential lupus results. I intend to cut back the position into the actual news but the run-up into the news should be relatively low risk.

The secret formula here is patience, a potentially positive catalyst and a stock that is being ignored and inefficiently priced. The chart provides a framework for managing the trade The same formula can be applied to many other stocks and works particularly well with smaller cap stocks that are not well known.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, James DePorre was Long AUPH.

TAGS: Investing | Stocks | Trading | Pharmaceuticals

More from Investing

Bearish Bets: 2 NYSE Stocks You Should Consider Shorting This Week

Bob Lang
Jan 24, 2021 10:30 AM EST

These names are displaying both quantitative and technical deterioration.

Price Targets: How They Mislead and How They Can be Used

James "Rev Shark" DePorre
Jan 23, 2021 10:00 AM EST

The main problem with price targets is that they are a static number in a dynamic situation.

Stock Market Continues to Defy Conventional Wisdom

James "Rev Shark" DePorre
Jan 22, 2021 5:04 PM EST

Concerns about the action being overheated remain, but rotational action keeps the momentum going.

AMC Is a High Risk, High Reward Play

Timothy Collins
Jan 22, 2021 2:15 PM EST

Short and sweet: This is based on the high running emotions of the markets. There's little to it beyond that.

GoodRx Needs a Shot in the Arm to Improve Its Outlook

Bruce Kamich
Jan 22, 2021 2:03 PM EST

IPOs in recent months have done extremely well -- not so GDRX.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    I discuss price targets in my Saturday column.
  • 07:54 AM EST GARY BERMAN

    Friday Morning Fibocall for 1/22/2021

    SPX (Long-Term View) The 1/21/21 NEW high @ 3861...
  • 11:16 AM EST CHRIS VERSACE

    Worst Stocks to Buy for the Biden Presidency

    Biden's take on the minimum wage, likely moves on ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login