Shares of Crispr Therapeutics AG (NASDAQ:CRSP) have been sliced and manipulated into a bearish stock in 2021. But for investors wanting to own one of the market’s and mankind’s next big things, CRSP stock is now appreciably closer to a more durable bullish sequence playing out on the price chart. Let me explain.
It happens to the best and brightest company shares. Last year, gene-editing giant CRSP was looking bullishly invincible as the stock surged nearly 160% with more than half those gains coming in the fourth quarter alone. The forceful leadership also occurred despite warnings Crispr Therapeutics was wildly-overpriced as it was feeling its oats. On Wall Street, the combination has a name. It’s called momentum trading.
Not that CRSP stock investors were alone in their convinced behavior. Far from it. From Bitcoin (CCC:BTC-USD) to Tesla (NASDAQ:TSLA), leaders in risk assets of all types took the helm for a dazzling and historic rally which ballooned price multiples and propelled the major averages to double-digit returns and record highs.
In 2021, it’s been a different and inescapable reality that’s plagued Crispr Therapeutics shares. It’s called a price correction. Again, not that Crispr Therapeutics has been alone. The past couple weeks has been tough for many of last year’s most dearly held investments. Still and once again, CRSP stock has done a fair job of leading the way lower.
This year’s stock dislocation has taken nearly 26% off Crispr since Jan. 1. That compares favorably or unfavorably, depending on how one looks at things, to the Nasdaq’s decline of around 4.5% and similar losses within the SPDR Biotech ETF (NYSEARCA:XBI).
And since its peak on Jan. 15, the stock has seen even more decisive action take place. CRSP’s market cap has shrunk a stinging 55% and relegated shares of the world’s largest genetic editing company back into a mid-cap valuation of $8.5 billion.
What’s Next for Crispr Therapeutics?
CRISPR’s revolutionary platform for editing genes isn’t going away. That’s a certainty.
In fact, it’s just getting started with the advent of artificial intelligence increasingly able to do the necessary and massive grunt work.
Now, and nearly a decade since it’s founder’s groundbreaking “scissors” gene modification discovery, Crispr Therapeutics ability to find therapies against a variety of human ailments or even engineer more robust pest and disease-resistant agriculture is finally here!
CRSP Stock Weekly Price Chart
Source: Charts by TradingView
What’s “here!” doesn’t mean overnight of course. That goes for both CRISPR’s breakthroughs in the living world, as well as what happens to CRSP stock. Yet, as with the biotech’s vastly improved prospects to solve critical problems, today’s price chart is at a point where investors should anticipate a bullish stock transformation as possible and increasingly a likely outcome.
As discussed above, all stocks correct. In healthy market environments, stocks of Crispr’s worth routinely see declines of 30% after substantial rallies. And in less-confident times like we find ourselves today, those losses can and often do, balloon. As much, there’s little need to dwell on CRSP’s larger correction other than to embrace it as a more useful occasion to buy growth at a discount.
Technically, the rapid decline in favor since mid-January has put Crispr shares into a testing position of trendline and Fibonacci support formed off last March’s ubiquitous novel coronavirus bottom. At the same time, a flattened oversold weekly stochastics supports today’s CRSP anxieties as likely overblown. Overall, the price chart is strongly hinting at a nearby bullish conclusion.
Given CRSP’s volatile hammer bottoming candlestick and not wanting to catch a knife, I’d suggest watching stochastics for a visible bullish crossover. I’d also stress that shares are trading above $110 before considering a stock purchase. The $110 share price is an eyeballed level, but looks important. It lies modestly beneath CRSP stock’s breached trendline and rests in the lower half of the hammer pattern. As much, it should work to warn investors against buying shares prematurely.
Lastly, if the stars do align for this kind of buy decision in the near future, a fully-hedged , dynamically-traded collar or bullish vertical on CRSP makes particularly good sense. As with any strategy and as momentum traders can attest, there’s always sacrifices. But given CRSP stock’s volatility and ever-present gap risks associated with biotech companies, that’s a compromise well worth consideration.
On the date of publication, Chris Tyler holds, directly or indirectly, positions in Greyscale Bitcoin (GBTC), but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.