Anybody who was in an Opexa Therapeutics Inc. (NASDAQ:OPXA) position before the close of business on February 4th is still likely thrilled with their stock-selection skill. Anybody who waited to buy OPXA until February 5th - when good news was unveiled - certainly have to be lamenting their decision. Shares are currently priced 60% below the opening price from February 5th, reminding everyone of an important lesson, and punishing those who forgot that lesson a month and a half ago.
The good news was the announcement that Opexa Therapeutics would be teaming up with Merck Serono in the development of Tcelna; the multiple sclerosis drug is currently in Phase 2 trials. The new partnership would put $5 million in the OPXA coffers, and potentially mean $225 million in cash if Tcelna is successfully developed. Given the company's sub-$10 million market cap at the time, the quadrupling of the stock's value is understandable.
On the other hand, the quadrupling of the stock's value was never built to last. As is all too often the case, euphoria and hype lured the masses into a trade, allowing the few pre-February-4th owners to get out at a huge profit. And they did. Shares of OPXA started to slide almost immediately after the news was unveiled, closing at $3.05 that day. It's likely that the very next day, most of the new Opexa Therapeutics investors started to filter out, and continued to filter out all the way to the low of $1.28 yesterday (and yesterday's bar was something of a blowout move that shoved shares under the one remaining technical floor, and almost closed the big gap from the 5th of last month).
Great, but what's that got Opexa Therapeutics today? Not only was yesterday's sharp dip a near-gap-closing one, but it was also something of a capitulatory one that washes out the last of the would-be sellers. Sure enough, shares are up pretty firmly today, on strong volume. More specifically, today's bar from OPXA is a bullish inside day, where today's entire range is engulfed just by yesterday's opening and closing levels (and is pointed in the other direction). It's a subtle hint that the trading environment tipped from a net-bearish one to a net-bullish one. Speculators can feel reasonably good about wading in here.
So what are the lessons being taught by the rise and fall and follow-up rebound effort from Opexa Therapeutics? Don't chase stocks.... particularly biotech stocks that pop on good news. As good as the news was here, OPXA still has to develop the drug, and that will take years - and millions of dollars - before getting to the endzone. The potential of Tcelna can drive the stock upward from here, but if the rally is to last, the stock's going to have to walk higher rather than leap higher. That's just a trading reality.
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