Exact Sciences Corporation, a molecular diagnostics company, focuses on developing diagnostic screening products for the early detection and prevention of colorectal pre-cancer and cancer. The company develops the Cologuard, a non-invasive stool-based DNA colorectal cancer-screening test that is designed to detect pre-cancerous lesions or polyps, and each of the four stages of colorectal cancer. Its Cologuard test includes proprietary and patented methods that isolate and analyze the human DNA that are shed into stool every day from the exfoliation of cells that line the colon; and also protein marker to detect blood in the stool, utilizing an antibody-based fecal immunochemical test. The company’s stool-based DNA colorectal cancer screening technology also focuses on the inflammatory bowel disease. It has collaboration, license, and purchase agreement with Genzyme Corporation, as well as with Mayo Clinic for developing tests to detect other gastro-intestinal cancers, primarily esophageal and pancreatic cancer.
Take a look at the 1-year chart of Exact (Nasdaq: EXAS) below with my added notations:
Over the last 5 months EXAS has consistently moved higher. During that time the stock had also formed a nice trend line of support (blue). Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. So, you can see that EXAS’ trendline is very important. Yesterday the stock broke the support.
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The Tale of the Tape: EXAS has broken below trend line support. A short position could be entered on a rally up to the trendline, which is currently near $19, with a stop placed above that level. A long position could be entered if EXAS were to break back above the trendline.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach