CRSP: Big orrection after the next rally, but buy-the-dip.
Updated
I believe that CRSP (Crispr Therapeutics) is about to undergo a severe correction soon.
I scaled into this stock during the latter part of 2022 and the first part of 2023 and it is up nearly 70% and has generated about 40% of pure alpha for me relative to the SPX.
So this has been an amazing performer for my total portfolio.
I believe this run may be nearing a pullback and I expect the correction to be a very severe one.
My suggestion is that this will form a triple-bottom/inverse head-and-shoulders pattern because this will be a subwave 2 correction and in theory, it should not overthrow the recent low by very much.
I think the post-correction rally will be sizeable (it'll be a macro Wave 3) and the catalyst for this rally will be the steady trend of slowly improving earnings that they have demonstrated over the past year.
(3 successive quarters of positive earnings calls - this has not been achieved since 2017)
So, in essence, presuming nothing else changes, I believe we should buy the next dip for a significant Wave 3 rally that will exceed the all-time highs.
In the meantime, expect lots of volatility, if you don't have the stomach for taking drawdowns or losses in the interim, you may want to sell the next rally so that you can buy back in. I will probably pursue this course of action myself purely as a matter of greed to preserve the alpha I have managed to capture.
Happy biotech trading!
I scaled into this stock during the latter part of 2022 and the first part of 2023 and it is up nearly 70% and has generated about 40% of pure alpha for me relative to the SPX.
So this has been an amazing performer for my total portfolio.
I believe this run may be nearing a pullback and I expect the correction to be a very severe one.
My suggestion is that this will form a triple-bottom/inverse head-and-shoulders pattern because this will be a subwave 2 correction and in theory, it should not overthrow the recent low by very much.
I think the post-correction rally will be sizeable (it'll be a macro Wave 3) and the catalyst for this rally will be the steady trend of slowly improving earnings that they have demonstrated over the past year.
(3 successive quarters of positive earnings calls - this has not been achieved since 2017)
So, in essence, presuming nothing else changes, I believe we should buy the next dip for a significant Wave 3 rally that will exceed the all-time highs.
In the meantime, expect lots of volatility, if you don't have the stomach for taking drawdowns or losses in the interim, you may want to sell the next rally so that you can buy back in. I will probably pursue this course of action myself purely as a matter of greed to preserve the alpha I have managed to capture.
Happy biotech trading!
Note
The official earnings forecasts are:-2.127 EPS
-1.8m Revenues
This is relative to the recent quarter which saw a fantastic earnings report of
-0.67 EPS (versus -1.271 estimated)
100m Revenues (versus 25.8m estimated)
This was a huge blow-out win. So the next earnings report, even if it's significantly above forecasts, is going to find it hard to beat this and this is one reason why they're going to show a QoQ Earnings collapse - because the recent quarter was so good, that pretty much anything will look shit in comparison.
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