Yesterday was exactly what the doctor ordered! The overall market, but especially the biotechs, needed a day of relief and bounce.
And boy, did biotechs bounce back yesterday.
Two days ago, the XBI experienced a textbook reversal candle. Seriously, Gang, that is a textbook reversal candle and an excellent example of what one looks like.
Then yesterday, the bounce was on! The XBI gapped up, held the gap, and closed the day up by 4.98%. Although the ETF is still trading below the key moving averages, yesterday was much needed for the ETF and the many potential small-cap biotech stocks that it can affect.
The XBI is still in an obvious downtrend from a technical perspective. So I am hoping that yesterday’s move signals a change in momentum.
Ideally, I would like to see some sideways action in the XBI for a couple of days, followed by another move higher into the 20 and 50d MA, which might signal a downtrend break.
As the XBI tracks small-cap biotech stocks, the bounce in the XBI and the sector is fantastic for small-cap stocks.
AFIB is one small-cap biotech stock that benefited from yesterday’s bounce in the sector and now finds itself on my watch list.
Acutus Medical (AFIB)
AFIB, according to Yahoo, is an arrhythmia management company. The company designs, manufactures and markets a range of tools for catheter-based ablation procedures to treat various arrhythmias in the United States and internationally.
Its product portfolio includes novel access sheaths, transseptal crossing tools, diagnostic and mapping catheters, conventional and contact force ablation catheters, and mapping and imaging consoles and accessories, as well as supporting algorithms and software programs.
Key Stats, per Finviz:
Market Cap: 102.75M
Float: 26M
Short Interest: 4.48%
Average Volume: 480K
The stock has an average target price set by analysts of $7.67. That’s considerably higher than where the stock closed yesterday ($3.65).
Recent News:
- November 11, 2021, AFIB reports third quarter 2021 financial results.
- November 11, 2021, AFIB initiates CE Mark Study for Focal Pulsed Field Ablation Therapy to treat Atrial Fibrillation.
Several things stood out to me yesterday on the chart that I like.
First off, notice the uptick in volume. That signals, to me, that there might be some real momentum behind the move yesterday.
The move yesterday also signaled a short-term, downward trend break. For several weeks, the stock has been trading in a steady downward trend, but yesterday with an increase in volume, the stock managed to break that.
I am now looking for the stock to hold above the 20d MA and $4.
I like the stock over $4 for a possible gap play.
If the stock can break above and hold above $4, I might look to get long, targeting key gap levels.
I might have $4.50 – $5 as my first target area and $6 as my ultimate target.
