$IMCR – BUY: @ $65.00, An Impulsive Reaction to the Setup

Summary

I had this on a secondary watchlist. I hadn’t been watching much the past few days and took a look this morning. I made an impulsive intraday move to place an order after liking what I saw. If I had been watching, I probably would have taken this trade two days ago at a low volume pivot. Nevertheless, today I placed an order at the point of least resistance, and that order filled. It ended up closing over that point on big volume, so it’s off to a good start.

Stage Analysis

This is showing all the characteristics of stage maturation. After IPO it went straight to Stage 4, where there was good stopping volume at the time to correct the decent. After some time in Stage 1, there was a big volume BO that started the current Stage 2.

Stage 2 Criteria

QUESTION	ANSWER
Bullish market trend	YES
Sector RS outperforming market	YES, by 9.74%
2x average volume on BO from Stage 1 or leading up to it	YES
30-week MA rising	YES
Price above 30-week MA	YES
Overhead supply over past 2 years	YES. IPO was about 2 years ago and above its IPO price
Outperforming SPX	YES. by 96.67%
Length of previous Stage 1	About 3 months

Base Count

I wasn’t sure if this was 2 bases or a base on top of base. The first was a C&H, but it only broke out 20%, which is less than the typical 30%. It then proceeded to fall back to the middle of the cup. Also, note that it failed right at the Stage 2 channel resistance. It eventually recovered back into a VCP after that shakeout at the low point. Therefore, I think that the C&H failed, but then there was a base reset into the VCP, which formed a base on top of base structure.

Base Structure

QUESTION	ANSWER
Identifiable base on weekly and daily	YES
Prior up-trend of at least 30%	YES, prior uptrend before the C&H was over 50%, the BO from the C&H was only 20%
Length of base At least 5 weeks flat base At least 9 weeks ascending base At least 7 weeks for all other bases	130 trading days
Contain elements of strength: Daily gap ups on volume RS at new high Tight price ranges KO Recoveries	YES, RS at new high, tight price ranges heading into BO, KO recoveries
Contain elements of support: Support weeks Base on top of base Price above 40-week MA	YES, big volume on up weeks, base on top of base, price above 40-week
Shakeout near low of base	YES, at low of VCP

Technicals

I bought today at the PoLR, which it closed above on big volume. Now we wait for follow-through.

VCP Criteria

QUESTION	ANSWER
Decreasing volatility from left to right	YES, from 25.59% to 6.93%
2 – 6 contractions (typically 2 – 4)	YES, 3
Each contraction is roughly 1/2 the previous	YES, 25.59%, 13.51%, 6.93%
Deepest contraction < 50%	YES, 25.59%
Deepest contraction < 2.5X the market decline	YES
On right side tight price ranges from high to low of range	YES, leading up to today’s BO
On right side lowest volume in base	YES
Rising RS as emerging from base	YES

Fundamentals

Fundamentals are limited. This is a commercial stage biotech that seems to have just turned profitable after last Q. However, there has been no ED since that report, which is a concern. Their fundamentals could be better, but it is also a new company.

Earnings

QUESTION	ANSWER
Past 2 quarters EPS growth >= 25%	NO, only latest Q 85.95%
Past 2 quarters margin growth >=25%	YES, 73.34%, 179.04%
EPS growth >= 25% in past 3 – 5 years	N/A
EPS surprises	YES, latest Q
EPS break out	YES, latest Q
Annual ROE >= 17%	NO, -117.43%
Earnings drift	NO