In his first "Executive Decision" segment of Mad Money Wednesday evening, Jim Cramer spoke with Andrew Allen, co-founder, president and CEO of Gritstone Oncology (GRTS) , the biotech applying targeted oncology therapies to develop the second generation of Covid vaccines.
News of positive pre-clinical trial data has sent the stock price soaring.
Allen admitted that he hopes Gritstone's vaccines are never needed on a large scale, but he said they are already starting to see signs that Covid is mutating. Those mutations, he said, may eventually become resistant to the current crop of vaccines that are only just beginning to roll out worldwide.
Based on the data thus far, Allen speculated that it's unlikely vaccines from Pfizer (PFE) and Moderna MRNA will see their effectiveness fall to zero. However, he said it is possible effectiveness could decline from 95% effective to 70% effective, which would be enough to cause alarm.
Plans are already underway to move Gritstone's vaccine candidate into Phase 1 trials, Allen added, and the company has access to all of the resources they need to continue their development of the next generation of Covid vaccines.
Let's check out the charts of GRTS which soared in recent days.
In this daily Japanese candlestick chart of GRTS, below, we can see a quiet bottom for six months in the $2 to $4 area from July to December. The scaling on this chart shrinks the trading volume histogram to nothing until January when volume explodes. Even going to a "log scale" chart (second chart below) does not reveal any turnover to speak of.
The 200-day moving average line is still declining and only the 50-day average line has turned positive.
The On-Balance-Volume (OBV) line shows a slight rise during December suggesting that perhaps people closer to the company did some buying ahead of the news. It happens.
The Moving Average Convergence Divergence (MACD) oscillator quickly turned bullish - no subtle clues here.
In this weekly Japanese candlestick chart of GRTS, below, we can see that prices were in a downtrend from 2018 and the recent rally is a bit surprising.
Prices are above the now rising 40-week moving average line which intersects down around $5. Based on the 40-week average GRTS is very overbought.
The OBV line and the MACD oscillator are bullish.
In this daily Point and Figure chart of GRTS, below, we can see that prices have soared well beyond their suggested $3 price target.
In this weekly close only Point and Figure chart of GRTS, below, we were able to structure the data to come up with a $69 price target.
Bottom line strategy: We really don't have much trading history for GRTS even though we have a weekly chart. The history we are concerned about is the past couple of weeks. Aggressive traders could consider buying a dip, if available, to the $18 area and risk to $12. IF GRTS is successful maybe our $69 price target is low. We'll see.