Ok, let's recap. Please feel free to add to the bullet points.
1. At 4:17 p.m. on the 25th, IBD send out a notice that CDMO will replace Cadence Bancorp (CADE) in the S&P SmallCap 600, effective prior to opening of trading on Friday, Oct. 29th. Surprise!!!
2. After hours and pre-market trading occurs which is different in nature than the small lot signaling that often happens.
3. Market opens and boom.
(a.) Huge 10%+ gap up.
(b.) Price exceeds 52 week high and all highs dating back to 2012. This is a huge deal for many traders.
(c.) Volume in 1st 10 minutes exceeds the normal average daily volume. Another big deal for many traders.
All of this is stunningly impressive to traders and should have had CDMO listed on IBD's "stocks on the move" list based on the volume and price increase. Unfortunately, even though IBD covers CDMO, they weren't listed today. Don't know why. Maybe they'll show up tomorrow.
4. Technical data from IBD.
(a.) CDMO prior to today was ranked 3rd in the Medical/Biomed/Biotech group. This group is currently ranked 81st out of the 197 groups IBD constantly ranks.
(b.) CDMO has a 97% relative strength rating, and accumulation/distribution rating of A- and an Up/Down Volume of 1.7.
(c.) Funds have increased ownership for the last 5 quarters, the sales/margin/ROE (smr) rating is A, and the 3-yr sales growth rate is 37%.
All pretty outstanding stuff.
5. From a charting perspective (for traders),
(a.) The gap over the previous 52-week high in early August is huge.
(b.) I use a MACD 24/52 vs. an EMA 18 to signal intermediate trends. The MACD crossed strongly to the upside about 2.5 weeks ago. Moving up strongly. This is good in my world.
(c.) I watch OBV (on-balance volume) closely. Since March, 2020 CDMO's been on a steady climb. Today sent it vertical.
(d.) Saw a lot of discussion about the gap and rapid rise and then the flat line. Not an expert but I have been doing this a long time and do trade a lot of "surprise factor" stocks. The rapid "first hour" rise followed by a flat line with possibly a slow bleed until the final hour is often the norm (just my observations). The pros open the market and are usually done in the first hour unless it's an unusual market day. Jr. traders take over and hold the ship steady till the pros return in the last hour. Just watching the minute chart, when the pros came back, buying picked up again.
All good stuff.
6. A few things already mentioned. Everyone knows about the institutional numbers. CDMO stock is not plentiful. Also saw mention of gaps being filled. I'm with the posters that made the observation that not all gaps get filled (may be the norm but not perfect) and the observation that the gap needing to be filled should only need to be the highs on 8/11 & 12 which is essentially where we descended to on the open today.
Anyway. Very encouraged by the day. Looking forward to the future.
Oh, oh, oh, one last point. I see a lot of folks obsessing about whether or not the company is managing the stock price properly and whether or not they're selling ATM shares to keep the price in line. Just me, and I know we're a little jaded by how past TCLN/PPHM management handled all of this, but most "good" managements don't play these game very much. They make a business growth plan and they follow it. They might be opportunistic occasionally, but usually, they keep they're nose down and take care of the things they can control. I see Nick as this kind of guy. He knows that if he keeps the team focused on adding new clients, getting production out the door and building new capacity with no hiccups on timing or costs, good things will result. The share price will take care of itself and suitors (welcome or not) will come calling. The big hammer on the minute-to-minute share price fluctuations and machinations is due to the market makers, traders and institutional holders as well as our new friends that will be coming on board.
Of course all of this is just IMO and the data is hopefully correct (please correct if wrong). And, please feel free to add information that adds to or possibly destroys the very good feeling I presently have. The landscape can change quickly. Always like to be up to date as much as possible.
Anyway, in closing, I'll ask - Did everyone enjoy yesterday/today's surprise? I know I did.
Regards,
WH
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