We wrote about CRISPR Therapeutics (CRSP) on January 6 and said traders should "Continue to hold longs risking to $149 now. Our price targets are $200 and $230 for now." CRSP is now trading around $215 so I think another look at the stock is warranted and perhaps a change in strategy.
In this updated daily Japanese candlestick chart of CRSP, below, we can see some weakening of the indicators. Trading volume has expanded this month as prices have increased. Normally this is considered a good thing but with heady gains in the broad averages we might be seeing too many recent longs with a high cost. A small pullback in the stock could inflict pain on the recent buyers.
Prices are above the rising 50-day and the rising 200-day moving average lines, but now prices are really extended above both of these measures. The On-Balance-Volume (OBV) line has climbed higher and tells us that buyers of CRSP have been aggressive.
The 12-day price momentum study in the lower panel shows lower highs from December into January. Lower highs mean that the pace of the rise has slowed. A slowing pace of acceleration can mean that some traders are resisting the advance or taking profits into strength. This is a heads up that the gains may not be sustainable.
In this weekly Japanese candlestick chart of CRSP, below, we can see the recent overbought reading from the slow stochastic indicator. We can see that prices are extended - $100 above the rising 40-week moving average line. The OBV is positive.
In this weekly line chart of CRSP, below, we can see an extreme condition with the Bollinger bands - very wide.
In this daily Point and Figure chart of CRSP, below, we see a new price target of $318 but also that there is not much in the way of nearby support (volume by price bars). A price retreat could be sharp.
Bottom line strategy: CRSP has soared in a short period of time to trade in the middle of our two price targets - $200 and $230. Momentum has slowed and my years of experience and the hairs on my neck tell me this is a time to nail down profits .
