Just for the record, yes, I was the same guy that said Sarepta Therapeutics Inc. (NASDAQ:SRPT) wasn't a 'buy' back on October 3rd. I'm changing my tune now, though, and no, the change of stance doesn't make me wishy washy. It makes be a trader who knows that timing is half the battle.
If the date rings a bell, October 3rd is the day Sarepta Therapeutics unveiled compelling Phase 2 testing results for Eteplirsen - a treatment for Duchenne muscular dystrophy. It was also the day SRPT shares jumped 200% on the news.
It's not that the stock didn't deserve a reward. My problem was with the size of the move... a 200% pop is a tough act to follow no matter how great the underlying news is. In fact, I specifically said "The drug - Eteplirsen - had shown significant promise in interim Phase 2 testing updates, and the results looked just as strong as the trial's endpoint, the results of which were released yesterday. It's a big win for Sarepta Therapeutics to be sure, but there's really nowhere for the stock left to go for a while. The company will still have to go through Phase 3 before approval, and investors may not be willing to hold the stock up at $34.00 while waiting on Phase 3 results."
By the end of October, SRPT had fallen back to end the month at $21.33. You're welcome.
I don't come here to gloat though. I come here to let you know that the technical problems Sarepta was facing then are no longer in play... one of the benefits of looking at things four months later. In fact, the chart that was so scary then has actually morphed into something quite bullish now.
Take a look. After pulling back in October, SRPT began finding a foothold at a rising support line. On the flipside, it also found a ceiling at a falling support line. Both are plotted in red on the nearby chart. As of this week, those converging trend lines have left little room for Serapta to move, forcing one side of the table or the other to play the winning hand. The bulls had that winning hand, a la the break past the ceiling. It may not have happened with much fanfare, but that's a good thing - it means newcomers don't have to chase it down and pray they're not getting in at a short-term peak.
Just so you know, nothing's changed with the company or its pipeline to spur the stock on now. Indeed, this is the way Serapta should have been priced and moving for a while. But, a big volatility jolt shook things up four months ago, and we're just now getting past the echoes of that jolt.