MRKR DAY TRADE SETUP – VWAP BOUNCE AND HIGH OF DAY BREAKOUT FOR 2.5 : 1 MAX GAIN RATIO
Marker Therapeutics, Inc (MRKR) announced yesterday that the FDA granted its “Orphan Drug” designation to MT-401, one of the company’s drugs used to treat patients with acute myeloid leukemia (AML), following allogeneic stem cell transplant. Its stock price consolidated during the first half hour of trading before making a break above the VWAP. It then proceeded to make a slow break above its high of day, and a final bounce before a sharp rise upward a little past 8:00 AM PT. The setup provided a maximum gain-loss ratio of 2.5 to 1. I entered late and and achieved a 1 to 1 gain-loss ratio. See my analysis below.
ACCOUNT OF EVENTS
The setup occurred on Thursday, April 30, 2020.
At 6:30 AM PT I saw that the markets were down, with the Dow Jones Industrial Average at -1.03%.
A headline on CNBC read, “Dow futures fall more than 300 points as jobless toll from virus tops 30 million.”
There was surely a bearish outlook for the day, so I knew I had to be extra diligent about finding stocks with a solid pattern and positive fundamental news on it.
I headed on over to Finviz to check out the morning’s top gainers. Unfortunately the choices did not seem very attractive at the time. They either had great patterns but no news on them, or great news with terrible patterns, including MRKR, which was at the #5 spot. It was up over 21 percent and traded over 300,000 shares. Unfortunately it sold off hard below the VWAP so I passed on it.
I spent much of my morning just waiting it out, refreshing Finviz every 5 minutes, but everything seemed to come up short. I entered an order on a stock that seemed to recovering from bad news, but the pattern couldn’t hold and I canceled my order. I even ended up missing a good trade on another stock (MTDR – setup logged in my data tracker). MRKR had fallen off the radar, dropping down to the #11 spot at one point.
I was about to chalk it up as just one of those lackluster mornings, which I suppose is not uncommon on bearish days such as this.
But then at 7:19 AM PT I saw that MRKR had jumped back up to the #3 spot on Finviz, up over 27% and over 1 million shares traded. I checked its chart and saw that it had already made a bounce off the VWAP as well as two bull flag poles. Usually by this time I would consider it too late to enter, but the stock had just broken through its high of day and was still under $3.00. I gambled on the chance that the positive news could squeeze it up considerably past $3.00.
At 7:20 AM PT the stock pulled back, hitting a low of $2.85. The recent high was $2.93 so I put in a buy stop market order at $2.96, the next 5 cent level plus 1. My intended stop loss was $2.79, the nearest 10 cent level below minus 1. I was going for a 2 to 1 gain-loss ratio so my intended target limit order was $3.30 [ (($2.96 – $2.79) x 2) + $2.96 ].
At 7:21 AM PT MRKR turned from red to green during consolidation. It spent a few minutes at the $2.90, during which I was able to add my stop loss and target limit levels to my open order with an OCO (Order Cancels Order) condition.
My buy order eventually got filled at 7:26 AM PT. At 7:27 AM PT MRKR hit $2.99. I began to cheer silently as I anticipated a breakout above $3.00 within the next few minutes.
But at 7:27 AM PT MRKR pulled back rather strongly, then seemed to be losing steam as it struggled to stay above $2.90. It touched $2.99 again at 7:36 AM PT. I breathed a sigh of relief as I thought resistance had been finally worn down, but the stock made yet another strong pull back, hitting $2.81 at 7:39 AM PT.
I felt my stop loss would eventually be hit as MRKR kept trending downward. At 7:49 AM PT it hit $2.80. A loss seemed inevitable.
But to my amazement, support held at $2.80 and not a penny less. MRKR reversed off the VWAP, also at $2.80, making a slow and steady comeback.
At 8:01 AM PT, MRKR ripped past $3.00, hitting a high of $3.20. I moved my stop loss to break even because the stock reached a 1 to 1 gain-loss ratio price, which was $3.13 [ (($2.96 – $2.79) + $2.96) ].
Furthermore, I like to move my stop loss to lock in a 1 to 1 gain-loss ratio once a stock reaches the 1.5 to 1 gain-loss ratio price, which was $3.21 [ (($2.96 – $2.79) x 1.5) + $2.96) ]. MRKR reached $3.22, so I quickly moved my stop loss to $3.13.
MRKR could not push any higher and my stop loss was hit at 8:05 AM PT. Not the gain I was shooting for but a gain regardless, and I was happy that I practiced good trading mechanics.
Looking back at the chart, I realized that I could have achieved a 2 to 1 gain-loss ratio if I had paid more attention to the stock and put in a buy order at $2.91 when the stock pulled back slightly at 7:15 AM PT. By that time it held a respectable #8 spot on Finviz, up over 21 percent and with over 800,000 shares traded. Hopefully as I get more seasoned I will become better at spotting these opportunities. For this reason, I will log the setup with a $2.91 entry in my data tracker.
NOTABLE DATA POINTS
Day of week: Thursday
Approximate market performance at open: Dow -1.03%, S&P 500 -0.68%, Nasdaq -0.03%
Company name: Marker Therapeutics, Inc.
Recent news date: 04-29-2020
Approximate performance before buy signal: +21.67%
Approximate volume before buy signal: 859,878
Float: 31.77 million shares
Setup: VWAP Bounce and High of Day Breakout
Buy signal time: 7:16 AM PT
Entry time: 7:19 AM PT
Maximum exit time: 8:03 AM PT
Entry wait time: 3 minutes
Exit wait time: 44 minutes
Order type: stop market buy
Entry price: $2.91
Stop loss price: $2.79
Maximum exit price: $3.21
Maximum gain-loss ratio: 2.5 to 1
Did I trade this setup? Yes, with late entry