When Will The Rally In Sarpeta Therapeutics End?

Over the past few years, Sarepta Therapeutics Inc (NASDAQ: SRPT) has been one of the most volatile issues on Wall Street. It's quest to gain FDA approval for Eteplirsen has been a rollercoaster, which has been reflected in the share price of the issue.

The battle for the drug's approval has proven to be a headache for Wall Street analysts covering the issue, with some firms taking their stands at the worst possible times.

In fact, back in April it traded down to $8, when it appeared the company wouldn't receive approval from the FDA. It quickly rebounded from that level and stabilized in the mid-$20 handle for July and August.

However, the tide turned last Tuesday, when Benzinga reported Eteplirsen's harshest critic, Dr. Ron Farkas, had left the FDA. That ignited a rally in the issue that is still ongoing.

Following Monday's $20 rally, the issue bottomed off its opening print of $51.95 and has gone on to best Monday's three-year high ($56.18), so far rallying to $56.80. Interestingly, the issue is pausing in the area of its former three-year high and despite rallying to this area, it has yet to even post a close above the $50 area.

It should be noted that the issue is still quite some distance from its all-time-high that was made in February 2000 at $163.50.

When issues such as Sarepta go into these parabolic moves, it's difficult to determine when the run has come to an end. For investors searching for a place to exit, it may be prudent to focus on the highest close for the move. By paying attention to that level, an investor may be able to get a feel of whether or not a much larger player is attempting to book some profits.

At this time, the high close for the move stands at Monday's close of $48.94. One other factor keep in mind will be if and when the volume begins to tail off in the issue. That may signal it's running out of buyers at these elevated levels and those wanting to exit the issue on strength, may have to exit on weakness.

After Monday's blowout volume of 51.2 million, the issue is on pace to have a larger than normal volume session as 11.4 million shares have changed hands with about three hours remaining.