What The Biogen Chart Reveals As Stock Rallies Hard On Alzheimer's Data

Zinger Key Points
  • The issue was halted in the after-hours session, so the price action was not factored into the premarket session beginning at 4 a.m.
  • Overly aggressive buyers participated in the opening print ($337.90) which was $140 higher than the close of $197.79.
What The Biogen Chart Reveals As Stock Rallies Hard On Alzheimer's Data

Going back to at least December 2014, Biogen Inc BIIB has been diligently working on drugs to cure Alzheimer's disease. Both the negative and positive data revealed over the years have instigated wild price gyrations in the issue.

Fortunately, the most recent data was to the good and the news is being reflected in Wednesday's price action, making it the PreMarket Prep Stock of the Day.

Biogen's Trading Range: Ahead of Wednesday’s announcement, the issue has been in a trading range since August 22, The top of the range was $216.17, and the stock only saw that level briefly on Sept. 12.
The last four daily highs congregated at the $200 area.

The bottom of the trading range was made on Aug. 31 at $193.55. Unlike the top of the range, investors had several opportunities to purchase the issue for under $196.

The Biogen News: Around 7:30 p.m. EST on Tuesday, Biogen announced a confirmatory reduction of clinical decline in a large global clinical study of lecanemab in 1,795 participants with early Alzheimer's disease.

The issue was halted in the after-hours session, so the price action was not factored into the premarket session beginning at 4 a.m. Wednesday. 

Premarket Biogen Price Action: Overly aggressive buyers participated in the opening print ($337.90) which was nearly $140 higher than the close of $197.79.

The overzealous buyers were more than met by welcome sellers, as that opening was the dead high of the premarket session. As it turns out, that wayward print was nearly $55 higher than the current intraday high of $283.44 as of 1:15 p.m. 

PreMarket Prep's Take: When the issue was being covered on the show it was trading at the $296 area.

“Wow, this nearly went to $340, I wish I had been up — I would have sold my stock,” said co-host Dennis Dick, who is long the issue with a cost basis of $41.

“I will probably not sell my stock today, but there is no way I am going to buy it up here.”

The author of this article alerted traders that in the past when the issue spiked higher on similar news, the premarket highs were never revisited. As a result, any sell targets should be reduced considerably for the regular session.

BIIB Price Action: Following a much higher open ($282.96 vs $197.79), the issue continued a bit higher before peaking at $283.44 and reversing course. The ensuing decline stopped well ahead of the top of Tuesday’s range ($200.95), only reaching $265.02.

Biogen shares were trading 39.25% higher at $275.43 Wednesday afternoon. 

The discussion on the issue from Wednesday’s show can be found here.

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