Swine Flu Stocks in Play

Posted by downtowntrader | 4/26/2009 09:09:00 PM View Comments

One of the huge benefits to using Twitter and Stocktwits is the constant stream of information that is always up to date and always at your disposal. The beauty of this model is how you can tap in to many different sources and take advantage of the collective thoughts of who you follow. If you build a solid follow list, it's almost like having a headstart on everyone else.

For instance, I was clueless on this whole Swine Flu story until I was looking at my twitter stream on my phone (another huge benefit to this medium). I was able to catch up in minutes and have been able to keep up to date without turning on the TV. I also was able to listen in on the traders I follow discussing what stocks may be in play on the Swine Flu story. Once I wanted to dig deeper, I browsed over to Stocktwits to tap in to a much larger group of traders.

One nice feature about the Stocktwits service is the "Top Tickers" frame. I was able to quickly see that the most mentioned stocks other than SPY was Novavax, Inc.
(Public, NASDAQ:NVAX) and BioCryst Pharmaceuticals, Inc.
(Public, NASDAQ:BCRX). You could also dig deeper into each ticker, but I was more interested in just seeing what stocks were the most mentioned.

I took a look at NVAX and BCRX and found something interesting which leads me to believe they will certainly be in play the next few days. In looking at their charts, both had huge moves on Friday, which was interesting because this story wasn't really "hot" yet. Obviously it was on someones radar, as they move had a surge in volume.

NVAX for instance had a huge move (75%) higher on Friday on a hugh increase in volume. This stock was also in play for the Asian Bird Flu scare a few years ago. This will almost certainly get a gap higher on Monday, so at this point, the best analysis is to figure out where support or resistance shoule come into play. There is a solid resistance level at $2.50 from a prior consolidation as well as the 20o-day moving average near $2.00. Either of these can act as support on a pullback if NVAX gaps up above either of those levels. There are many different scenarios that can unfold here, so it's best to plan for a few. If it gaps above both levels, it would be quite bullish, and there is a good chance the gap would remain unfilled for a while. If it gaps over the 200, then the $2.50 level may act as resistance intitially, with the 200 supporting a pullback. If it loses either of these levels on large volume, then it may be a sell the news event and end up much lower.

BCRX actually looks a little better as far as the chart goes, but it will be interesting to see how the market responds to BioCryst CEO John Stonehouse saying his company does not anticipate the use of its technology in treating this episode of swine flu.

"We're in clinical trials right now and not on the market," Stonehouse said.

BCRX is trading in a larger consolidation, and judging by the level of interest in it, it will likely gap over the base on Monday. With BCRX already over the 200-day moving average and likely above a base, it will be more likely to find support on a pullback. Digging deeper, Fridays move also has it clearing a small bull pennant, so BCRX could see another surge out of that pattern.

While I have no idea whether this is a scare or that start of a pandemic, I'm pretty certain there will be money to be made in these stocks over the next few days. There are other stocks that may see interest as well, but I will focus on these tomorrow due to the attention they are already recieving. While some traders will be scrambling around tomorrow trying to find out what is in play why these stocks are moving, thanks toTwitter and Stocktwits I was already prepared. If you're already on twitter you can follow me here.

Good Trading,



Pretty cool Google maps view of the H1N1 Swine Flu infections

Also, some other stocks that may be in play tomorrow include

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