At this point, who knows when the market rally will cool off?
Everyday it just seems like its just up, up and up again. Eventually, the markets will pullback a bit, but until they do, investors and traders will ride the gravy train as long as it goes.
Thanks to the market run-up a lot of stocks already seem somewhat extended. However, there are some stocks that are a little late to the party and are just now breaking higher.
For example, Celldex (NASDAQ: CLDX) just broke out above its $18 resistance only a week or so ago. In that period of time that stock has already hit a high of over $21.
Another biotech name that just broke out this week, and whose chart looks very similar to Celldex, would be Xoma.
XOMA Corporation discovers and develops antibody-based therapeutics in the United States, Europe, and the Asia Pacific.
The company’s proprietary products include XOMA metabolic activating, sensitizing, and antagonizing/deactivating antibodies that are in preclinical stage for the treatment of diabetes patients, a multi-antibody product for the treatment of human botulism poisoning, and a topical anti-bacterial product for the treatment of human immune system.
Review the 1-year chart of XOMA with the added notations:
After losing over 60 percent of its value, XOMA finally found a bottom in May near $3.50 a share.
Since that bottom, the stock has been trading in a well-defined range between a low of around $3.60 and a topside resistance at $5. This sideways range appears to have been a basing process for XOMA.
Earlier this week XOMA broke through its $5 resistance and did so with a large increase in volume. High volume tends to add validity to a breakout.
Commonly, when stocks form XOMA’s type of pattern and breakout, higher prices overall can be expected.
The stock closed yesterday at $5.52.
No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key.