Predicting data or approvals on pharmaceutical companies' drugs are next to impossible without inside information. However, there are trends that are very useful and have been proven to work in the past if you are trying to predict these outcomes.
This post will be very short, but the trend I share here should be very useful for your future trades/investments.
In my post about net neutrality, I wrote about the trends in Verizon and AT&T and other such stocks before the FCC announced their proposal on net neutrality. I mentioned how these had a significant upward trend of at least 1 week before the FCC ruling. I suggested that these rises were due to the fact that investors expected a favorable ruling from the FCC on these stocks (in this case, a proposal for net neutrality). As I predicted, the FCC ruled in favor of net neutrality.
Essentially, the trend is this:
If a stock climbs for at least one week before a catalyst (whether it be within the company or for the sector as a whole), the most likely outcome is that the catalyst be ruled in company's favor.
Now, this trend isn't specific to the technology sector. It is a universal trend in stocks, particularly in pharmaceutical stocks. A classic example of this trend is the company I am now going to write about: Heat Biologics (HTBX).
Here is a picture to better help you visualize this trend:
Now, HTBX is to present phase 2 data on two drugs-HS-110 and nivolumab (Opdivo)-on February 28. What I have circled indicated the first part of this trend. The circled portion indicates that investors and traders alike are piling into the stock before the big day, indicating that they feel the company will report positive data. On top of that, the irregular volume over the period on this circled portion indicates that big investors are taking large positions on this stock. This is huge for traders and other investors because it gives them the sense that these big investors are confident that the stock will report positive data, therefore causing a "ripple" effect among others.
Because of how well this trend has worked in the past, I fully anticipate that Heat Biologics will report positive data. I recommend that you buy this stock immediately and sell on the day they release the data (Feb. 28).
Now, there is the age old tale of "Buy the rumor, sell the news" in the financial industry. I am well aware of this trend. I would be saying buy and sell before Feb. 28 or whenever you can make a profit. This is because of the fact that the catalyst has already been factored into the stock's price (the rumor) and the market will correct the price back to its regular levels on the actual day of the catalyst (the news). Although this may discourage traders and investors, I am not worried for this reason: Volume. If there was regular or even below average volume for a stock (following this trend) heading into a catalyst, it indicates that there is "fake" money going into the stock and the main reason for the rise is the hype and "rumor" of a good result. However, if volume is consistently above average for at least a week before the catalyst, and the stock is rising, this indicates that investors, particularly institutions and insiders, are expecting an even bigger rise on the actual day of the news.
Moreover, this trend is great for future trades and investments and has worked well for me in my previous financial decisions.
If I had to put a number on how accurate this trend is in terms of predicting the catalyst result, I would say 70%.
Thanks for reading!
I do not currently own shares of HTBX nor was i paid to either promote or sell HTBX. Please read my disclaimer before making any financial decisions.