Technical Analysis: OraSure’s big move
Today's Financial News - Posted September 25, 2009
I am no fan of technical analysis, but occasionally the simplest of patterns can lead to big gains. Is that the case with OraSure Technologies (NASDAQ:OSUR)?
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): The gains come and go. After an intra-day surge that handed investors gains of over 20%, shares of OraSure Technologies (NASDAQ:OSUR) ended yesterday’s session with barely a double-digit gain.
Today, investors are forced to sit back and watch their shares give back even more of the newfound value. It may be a perfect opportunity to hop in on a volatile, but potentially lucrative play.
OraSure surged yesterday thanks to news the company received a 36-month contract for one of its unique HIV tests. The news happened to coincide with a major announcement from international researchers detailing the advances of a possible new HIV vaccine.
While an HIV cure would be detrimental to OraSure’s business, it is a long way off. In the meantime, the company has plenty of growth potential.
Let’s get technical
The company’s OraQuick ADVANCE test allows hospitals to quickly (in less than twenty minutes) test patients for the deadly virus. Yesterday’s contract announcement, which allows OraSure access to a group purchasing program representing ninety firms, shines light on the company’s potential.
As a trader, however, the charting action is what gets me excited. While I am no big fan of technical analysis, I will search out basic patterns and volume trends. Charts can give strong indications of what is to come.
During yesterday’s session, OraQuick’s chart was a simple inverted-V formation, with the peak right in the middle of the session. What this shows us is a slew of investors were willing to pay a premium to get in on the company’s action.
As these buyers jumped in and took share price to recent highs, the hot action caused other investors to sell their shares and lock in their profits. In other words, supply opened up at the end of the session, helping to lower prices.
It is all right there in the volume chart.
Going forward, the action is likely to be far less volatile, which is good news for the bulls. As the profit taking subsides, the supply of shares will decline and share prices will rise.
Right now, $3.00 looks like a key level for the stock. Anything below that price is a buying opportunity for speculative investors.
Keep your eye on this small-cap mover. Before long the charts will show you everything you need to know about its future action.
Next Article: Take 26% gains on Indian pharma giant Dr. Reddy’s (RDY)
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