Endocyte, Inc., a biopharmaceutical company, develops targeted therapies for the treatment of cancer and inflammatory diseases in the United States. The company uses its technology to create novel small molecule drug conjugates (SMDCs) and companion imaging agents.
Take a look at the 1-year chart of Endocyte (NASDAQ: ECYT) below with my added notations:
ECYT had formed a key level of resistance at the $15 level (blue) back during the months of May and June. However, the stock broke through that resistance earlier in July, and now that ECYT is coming back down to that expected $15 support, a bounce could be expected.
The Tale of the Tape: ECYT broke through its key level of resistance at $15. A long trade could be entered on a pull back down to that level. However, a break back below $15 could negate the forecast for a higher move and would be an opportunity to get short the stock.
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