MDGS DAY TRADE SETUP – VWAP BOUNCE AND HIGH OF DAY BREAKOUT FOR 1.45 : 1 MAX GAIN RATIO

Medigus Ltd (MDGS) announced today that it recently received its first commercial order for COVID-19 serological test kits. Its stock traded heavily today during the first hour of trading, bouncing off the VWAP and briefly trading above $5.00 before making a gradual decline that lasted through the day. The short lived move provided traders an opportunity to achieve a maximum gain-loss ratio of 1.45 to 1. See my analysis below.

MDGS - Winning Day Trade Setup - VWAP Bounce and High of Day Breakout - 05-01-2020

ACCOUNT OF EVENTS

The setup occurred on Friday, May 1, 2020.

At 6:30 AM PT I checked my TD Ameritrade app to see how the markets were doing. There was negative bias, with the Dow at -1.77%.

I headed over to CNBC to see if there was any news to aid me in my trades today. There didn’t seem to be anything fundamental as the main headline read “Dow set to fall more than 400 points after best month in three decades, Amazon leading tech lower.”

I opened up Finviz to see this morning’s top gainers. There were only a handful of stocks that were up 10 percent or more, which is not unusual for a Friday. Even less so were the number of attractive stocks. Sometimes I actually prefer this, as it makes it less complicated to narrow down, especially when one of them has glaring positive news on it.

Right at the #1 spot was MDGS, up over 82 percent with nearly 6 million shares traded. The news was quite positive. I figured it was a good catalyst since the US’ struggles with Covid-19 testing have been well publicized. I placed it at the top of my mental short list.

Myomo (MYO) held the #2 spot and had great volume, but there was no news on it. There was negative news on it a few weeks ago, so I didn’t write it off completely, as it could have possibly been a good recovery play. I have, in fact, traded that stock successfully in the past.

Akari Therapeutics (AKTX)  held the #3 spot. It had positive news on it, but it was well below the VWAP already and didn’t have much volume.

I watched these stocks for the first 10 minutes of trading. MYO and AKTX sold off hard while MDGS was oscillating across the VWAP. I decided to lock onto this one and ignore the others.

At 6:41 AM PT it popped up sharply above the VWAP and touched $4.41. Then, at 6:42 AM PT it pulled back and touched $4.00. With this in mind, I placed a buy stop market order at $4.46 with an intended stop loss at $3.99.

MDGS then made some big strides up, filling my buy order at 6:45 AM PT. I added my stop loss soon after. Since I was going for a 2 to 1 gain-loss ratio I placed my target limit order at $5.40 [ (($4.46 – $3.99) x 2) + $4.46 ].

At 6:47 AM PT the stock broke its high of day. It then bull flagged and pushed as high as $5.15 at 6:52 AM PT. I moved my stop loss to break even because the stock reached my 1 to 1 gain-loss ratio price of $4.93 [ (($4.46 – $3.99)) + $4.46 ].

I was hoping MDGS was reach my 1.5 to 1 gain-loss ratio price of $5.17 [ (($4.46 – $3.99) x 1.5) + $4.46 ] so I could move my stop loss to $4.93 and lock in a 1 to 1 gain-loss ratio. Unfortunately it never did and I got stopped out at break even at 7:09 AM PT.

Anyone who was going for a 1 to 1 gain-loss ratio would have profited from this setup. So although I myself did not profit, I am logging this as a winning setup in my data tracker.

NOTABLE DATA POINTS

Date: 05-01-2020

Day of week: Friday

Approximate market performance at open: Dow -1.57%, S&P 500 -1.75%, Nasdaq -2.05%

Company name: Medigus Ltd.

Symbol: MDGS

Sector: Medical Appliances and Equipment

Recent news date: 05-01-2020

Recent news headline: Medigus and L1 Systems Received First Commercial Order for COVID-19 Testing Kits

Approximate performance before buy signal: +75.05%

Approximate volume before buy signal: 14,492,009

Float: 2.33 million shares

Setup: VWAP Bounce and High of Day Breakout

Buy signal time: 6:43 AM PT

Entry time: 6:45 AM PT

Maximum exit time: 6:52 AM PT

Entry wait time: 2 minutes

Exit wait time: 7 minutes

Order type: buy stop market

Entry price: $4.46

Stop loss price: $3.39

Maximum exit price: $5.14

Maximum gain-loss ratio: 1.45 to 1

Did I trade this setup? Yes

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.

MRKR - Winning Day Trade Setup - VWAP Bounce and High Of Day Breakout - 04-30-2020

 

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

Date: 04-30-2020

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.

Symbol: MRKR

Sector: Biotechnology

Recent news date: 04-29-2020

Recent news headline: Marker Therapeutics Receives FDA Orphan Drug Designation for its Multi-Antigen Targeted T Cell Therapy for Acute Myeloid Leukemia

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

CMRX DAY TRADE SETUP – VWAP BOUNCE AND HIGH OF DAY BREAKOUT FOR 3.34 : 1 MAX GAIN RATIO

Chimerix, Inc. (CMRX) announced today that it is beginning phase 2 of 3 of its study of dociparstat sodium (DSTAT) to reduce excessive anti-inflammatory responses in patients with severe Covid-19 infection. The announcement came a day after it announced that the FDA approved the aforementioned study. Its stock price traded back and forth along the VWAP during much of the first hour before breaking its high of day. It surged even higher a little past the first hour. The setup yielded a maximum gain-loss ratio of 3.34 to 1. See my analysis below.

CMRX - Winning Day Trade Setup - VWAP Bounce and High of Day Breakout - 04-29-2020

 

ACCOUNT OF EVENTS

The setup occurred on Wednesday, April 29, 2020.

I usually get up really early in the morning to do my routine before the markets open, but I forgot to set my alarm last night, and I woke up right when the markets opened.

So I jumped out of bed to grab my phone and start putting together my trading setup.

At 6:32 AM PT I checked how the markets were doing. There was strong upward bias as all three major indices were up more than one percent, with the Dow Jones Industrial Average at +1.52%.

Next, I headed over to CNBC to check for any major news that would aid me in my trading today. A headline read “Dow surges more than 400 points as positive Gilead news lifts hope for coronavirus treatment.” Gilead is a big, slow moving stock so I knew I wouldn’t be trading it. However, I had a feeling that the news would push up smaller stocks in the biotechnology. So, I made a mental note of that.

Then I headed over Finviz to check out the list of top gainers. Indeed, there was a biotechnology stock (CAPR) that was in the number 1 spot. It had positive news on it, so I looked at its chart. Unfortunately it was selling off below the VWAP a bit, so I passed on it. It would eventually make a powerful move up later in the morning. I missed that trade but I have logged the setup in my data tracker.

I moved on to the remaining top gainers, which turned out to be disappointments. Many of them had false breakouts. So I waited it out, refreshing my view on Finviz every 5 minutes.

At 6:44 AM PT I saw that CMRX had jumped up to the number 4 spot on the list. I checked its chart. It had made a strong close at $2.07, its high of day at that moment. It was up over 34% and traded over 3 million shares. I saw the positive news on it and started looking for my opportunity to enter a trade.

But then it started selling off, going back below the VWAP reaching as far down as $1.88. Since it was both below the VWAP and that critical whole dollar support ($2.00) that I like to see, I wrote the stock off and started looking at other stocks.

The charts on the other stocks did not look interesting either though, and I spent the next several minutes just waiting. I was about to think that it would be a lackluster morning, but at 7:09 AM PT I saw that CMRX at shot back up to the number 2 spot on Finviz, up over 34% again and had over 5.5 million shares traded.

I checked the chart and I saw that it had touched $2.07 again before dropping back down to the VWAP. Seeing that it touched this exact price twice, I had a feeling that if it could make a strong bounce off the VWAP it could break past this level, which could have opened up a window for a rally.

At 7:12 AM PT the stock did in fact make a strong bounce off the VWAP. I then closed higher with each minute testing $2.07 once again at 7:16 AM PT.

I quickly put in a buy stop market order at $2.11, with an intended stop loss at $1.99. CMRX then broke past $2.10 at 7:17 AM PT, and my order was filled.

I quickly went  to my open position and added my stop loss price with an OCO (Order Cancels Order) condition. Since I was shooting for a 2 to 1 gain-loss ratio I added my target limit price of $2.35 [ (($2.11 – 1.99) x 2) + $2.11 ].

CMRX pulled back between 7:20 AM PT and 7:23 AM PT before pushing higher. It then exploded past $2.20 and $2.30 at 7:31 AM PT, during which time my target limit order was filled. I didn’t even have time to move my stop loss to break even. The stock continued to push higher during the next several minutes, eventually reaching a maximum exit price of $2.61.

While I am happy with the result of this trade, I think I entered it a little early. Normally I would wait for a pullback after a strong price movement, but I didn’t this time. I’ll chalk it up to simply not following the rules in the heat of the moment.

Looking back at the chart, I see a safer entry at $2.21. The buy signal would have been the switch from red candle to green candle at 7:21 AM PT during the pullback. The stop loss price would have been $2.09, a penny below the ten cent level at the bottom of the pullback. The target limit price for a 2 to 1 gain-loss ratio would have been $2.45 [ (($2.21 – $2.09) x 2) + $2.21 ], which would have been reached at 7:32 AM PT.

Since one of the goals of this blog is to cover clean and clearly defined setups, I have entered the data of the more conservative setup on this post, but recorded the data for both setups in my tracking log.

NOTABLE DATA POINTS

Date: 04-29-2020

Day of week: Wednesday

Approximate market performance at open: Dow +1.52%, S&P 500 +1.85%, Nasdaq +2.13%

Company name: Syndax Pharmaceuticals, Inc.

Symbol: CMRX

Sector: Biotechnology

Recent news date: 04-29-2020

Recent news headline: Chimerix Announces Initiation of a Phase 2/3 Study of DSTAT in Acute Lung Injury for Patients with Severe COVID-19

Approximate performance before buy signal: +39.74%

Approximate volume before buy signal: 6,752,489

Float: 50.62 million shares

Setup: VWAP Bounce and High of Day Breakout

Buy signal time: 7:21 AM PT

Entry time: 7:30 AM PT

Maximum exit time: 7:46 AM PT

Entry wait time: 9 minutes

Exit wait time: 16 minutes

Order type: stop market buy

Entry price: $2.21

Stop loss price: $2.09

Maximum exit price: $2.61

Maximum gain-loss ratio: 3.34 to 1

Did I trade this setup? Yes, with early entry