Trade of the Week for October 24, 2016
On Tuesday, October 25th we traded Dipexium Pharmaceuticals Inc. (DPRX), yet another pharmaceutical stock that gave us a “dead-cat bounce” opportunity. As is usually the case in these situations, DPRX had reported a failure to meet goals in its Phase 3 trial. After closing on October 24th at $12.75, this stock opened up at $2 in the premarket!
Now, nothing is ever certain in the world of trading, and just because a stock drops 84% overnight does not mean it will always bounce at the open. However, we’ve seen it happen and have traded the bounce countless times, so it’s always something to watch out for. $2.20 was the important level to watch, as it acted as resistance in premarket as well as the open. We can see higher lows at the open and when the price broke above the $2.20 resistance level, the same level acted as support shortly after, only to continue its run up to $3.35! With overall volume at a good level, this was a great trade opportunity we were happy to take advantage of.