In his first "Executive Decision" segment his Mad Money program Thursday night, Jim Cramer spoke with Dr. Henry Ji, chairman, president and CEO of Sorrento Therapeutics (SRNE) , the biotech company that is working towards treatments for Covid-19.
Ji said work continues on the company's neutralizing antibody therapy for Covid-19. Sorrento just entered clinical trials for its first-generation therapy and are on track to be filing to test their second generation in late November. He said it's been very encouraged by the success of Regeneron (REGN) , which has a similar therapy. Work is continuing on Sorrento's rapid test for Covid as well.
We last looked at SRNE on Aug. 11 and wrote that, "A possible harami reversal on the candlestick chart and the first sign that trading volume could be increasing on a down day (a peak in the OBV line) suggest that short-term traders may want to nail down profits and trade more cautiously." Prices quickly retreated to $6 so our advice looks well timed.
Let's check out SRNE charts again today.
In the updated daily bar chart of SRNE, below, we can see that the shares rebounded after their August-September decline. The recovery is not quite 50% of the decline so SRNE did not put the bears on the defensive. In my mind a recovery of more than 50% of decline makes the bears or shorts sweat. Less than 50% tells me they are still in control.
The On-Balance-Volume (OBV) line made a shallow decline from August into September and a shallow recovery from September. Buyers are only slightly more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line again but looks like it is rolling over toward a new sell signal.
In the weekly bar chart of SRNE, below, we see a mixed picture. The shares are above the rising 40-week moving average line but the indicators do not tell us a bullish story. We can see volume surges at the two price spikes this year suggesting that there might be longs stuck at unfavorable price levels. This overhang or resistance may be an impediment to renewed gains.
The OBV line shows an up and down pattern and no sustained buying. The MACD oscillator is pointed down.
In this daily Point and Figure chart of SRNE, below, we can see a potential downside price target in the $8.50 area. If this decline were to occur it would put prices below the cresting 50-day moving average line.
Bottom-line strategy: The charts and indicators of SRNE are not particularly bullish. I like to look for more compelling setups. I would stand aside for now.
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