The best trades occur when technical and fundamental conditions converge.
In the course of my trading, I'm always looking for situations in which the stock is in a good technical position to move if and when good news hits. Solid fundamentals are not enough. Even when the story is good, the chances of a great trade are enhanced when there are technical conditions to help drive it.
A current example is a name I've mentioned many times since it was my Stock of the Week on Aug. 9. Xeris Pharmaceuticals (XERS) is a specialty pharmaceutical company using its novel technology platforms to develop and commercialize ready-to-use injectable and infusible drug formulations.
Xeris' technology addresses the issue that arises from water-based delivery systems. It is offering the Gvoke HypoPen that allows for easy injection of glucagon, which is needed when diabetics have low blood sugar issues.
After more than doubling from our August entry point, the stock has pulled back substantially and is finding support around $5 which is also the 50-day simple moving average.
The $5 level looks like a good place to enter and start anticipating a news catalyst that should occur into the next earnings report. No date is set for that report so far but it should be in early November. At that time I anticipate that management will announce progress on other projects, which should move the stock.
In the meantime, the stock is basing and forming support. Should XERS falter it is an easy stop-out and that would present an opportunity for a remount.
I've actively traded the stock dozens of times and am now looking for the next setup. With earnings news coming in three weeks or so I think the timing is good to start positioning.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider XERS to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.