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It feels like we’re venturing through Antarctica’s south pole right now, with regards to IPO registration.

The coronavirus pandemic has triggered a freeze in the number of companies that are willing to attempt a public debut in these uncertain market conditions.

That doesn’t mean that we can’t take profits on IPOs that already hit the market within the past year.

[I scored a nice $4K win on pet food delivery company, Chewy (CHWY) even as more jobless claims were pouring in].

It just means that brand new IPOs are slim pickings.

So what rookies can we potentially put into play this week?

Well, have a look…

 

(Courtesy of Market Watch)

 

Last week, we saw two companies —WiMi Hologram Cloud (WIMI) and Zentalis Pharmaceuticals (ZNTL)— test themselves against the elements.

We covered WIMI here last week, and it’s been a bit of a fun one to track.

But today, I want to take a look at ZNTL, as well as Keros Therapeutics (KROS) that just went public this week, as they both fall in the healthcare/ life sciences sector.

Both of them could easily perform well during the current pandemic, thanks to sympathy plays from related companies staging coronavirus relief efforts.

Healthcare companies, in general, have been one of the few bright spots for the market lately.

 

Zentalis Pharmaceuticals (ZNTL)

 

The coronavirus may be on the top of everyone’s mind right now, but the demand for a cancer cure is still far greater.

In 2019, over 600,000 people died from cancer, whereas the number of coronavirus deaths so far is 15,000.

Zentalis Pharmaceuticals aims to alleviate the heavy burden caused by cancer each year by discovering and developing treatments.

According to the company website: “We are focused on the creation of differentiated small molecule treatments targeting fundamental biological pathways of cancer.”

The company currently has four products in the pipeline, and three of these products are in phase 1 or 2.

These products target breast cancer, solid tumors, hematologic malignancies, and non-small-cell lung carcinoma.

Since the company’s inception in 2014, they have raised $147 million — including $85 million in series C financing to cap off last year, thanks to investors like Matrix Capital, Redmile Group, and Viking Global Investors.

The company offered 9.18 million shares at $18 apiece, the top of their price range, in its public debut.

Zentalis also has strong partnerships right now, which include Pfizer. And Pfizer, interestingly enough, is collaborating with BioNTech, a company developing a potential CONVID-19 vaccine.

So it’s unsurprising that the company rose 29% in its initial trading debut, after having raised $165 million through the IPO.

 

 

Keros Therapeutics (KROS)

 

Much like Zentalis (ZNTL), Keros Therapeutics (KROS) is currently riding the strong trend in biotech, one of the few sectors that have been able to stay afloat during this coronavirus pandemic.

30 to 35 biotech companies will go public this year and raise about $3.5 billion according to Jordan Saxe, head of healthcare listings at Nasdaq. That’s if the pandemic successfully levels out by June.

This number is down only somewhat from last year, in which 46 biotech companies completed their IPOs and generated $5.46 billion overall, according to Bloomberg data.

But right now, Keros is very much leading the charge.

The company develops new treatments for patients that suffer from hematologic and musculoskeletal disorders.

The company has 7 products in the pipeline, and two of their hematology products have completed phase 1.

Thanks to the IPO, the company now has an additional $96 million that they can devote to their research and development.

Even despite all this volatility in the markets, Keros managed to raise even more money than it initially anticipated.

Whereas it had planned to offer 5 million shares at $14 to $16 each, the company was able to offer 6 million shares at the high end of their price range, $16.

Though the company has only been trading for just under a week now, it’s already come strong out of the gate.

 

 

Watch Me Put ZNTL and KROS Into Play

 

While I can’t guarantee I’ll be trading ZNTL or KROS this week or next, I’m really loving their fundamentals and the strength of the biotech sector overall right now.

But one thing is for sure.

I’m putting on IPO trades just like this every week for my exclusive subscribers to show them how to get a piece of the exciting IPO market.

The overall market may be volatile right now, but I’m putting out a watchlist each and every week to help folks learn to take profits on the IPOs showing great market divergence.

Author: Ben Sturgill

Make no mistake about it, the market is hot.

This makes it difficult to sometimes locate spots to enter trades.

After all, you want to be disciplined, but you also don’t want the stock to “run away” from your price.

What do I do to try to overcome these common problems traders face in a strong trending market?

I use the TTM Squeeze indicator. It allows me to pinpoint my entries and trade with confidence.

And today I’m going to give you a lesson on how to get the most out of it.

 

The TTM Squeeze Indicator

The TTM indicator measures the relationship between two popular studies: The Bollinger Bands and Keltner’s Channels.

This indicator allows us to identify periods of consolidation and anticipate when momentum is about to kick in.

Additionally, it helps the trader to not only identify periods of consolidation but also indicate which direction the trade is about to take for its next move.

There are three major components to the TTM Squeeze Indicator:

 

  1. Bollinger Band
  2. Keltner Channel
  3. Zero Line


Each component plays a key role in this unique indicator.

The Squeeze indicator finds sections of the Bollinger Bands study which fall inside the Keltner’s Channels.

When the market finishes a move, the indicator turns off, which corresponds to bands having pushed well outside the range of Keltner’s Channels.

For myself, I primarily focus on the Zero Line and how price reacts to changes in either the direction of momentum or volatility increasing.

I find this gives me the clearest information to help identify new trends, changes in momentum, and increased volatility.

Let’s take a look at some SPY charts and break down what the indicator is telling me.

SPY Weekly:

 

 

Looking at the above image of the SPY on the Weekly timeframe, the line on the right points to the first bar that is breaking above the zero line.

This is telling us that SPY could continue higher in the upcoming weeks.

As a daily timeframe trader, it’s not wise to go against what the macro trend is indicating. 9/10 times a trader suffers most of their losses by ignoring a very common phrase, “the trend is your friend”.

 


SPY Daily:

 


Looking at the above image of the SPY on the Daily timeframe, the line on the left points to the first bar that is breaking above the zero line.

This is telling us that SPY could continue higher.

This point on the zero line is interesting to me for two reasons.

First, it’s indicating that there is a change in momentum from a negatively trending market to possibly a positive trending market.

Secondly, there was no period of consolidation, or red dots, indicating low volatility and consolidation in the price action.

Why is this interesting?

Well, as a daily trader and swing trader of the markets it’s important that I know what the trends are on top of what direction they are going to be heading towards.

Get any of these wrong, and you are facing potentially major losses on the trades.

There are some instances where we can trade daily time frame based on hourly price movement

 


SPY Hourly:

 


Just as this indicator pointed to higher markets on both the weekly and daily timeframes, the hourly chart is also pointing to higher prices.

This indicator triggered overnight Sunday into Monday this week, pointing to higher prices and continued momentum to the upside.

Another key thing to remember is looking “up” in timeframes.

You would look up to the weekly chart from the daily chart, you would also look up to the daily chart from the hourly chart.

Why do this?

This is important and helps to maintain the correct direction you are trying to trade in.

Many times I hear traders that are long the markets on the daily timeframe and are short the markets on a 1-hour time frame.

Now I am not saying that this is not a tactic that the pros use, but to proceed with caution as this can lead to confusion and easily overwhelm any beginning trader.

Pro Tip: Lower time frames are typically used as entry and exits to support the higher time frame when swing trading.How to use the TTM indicator in 3 easy steps:

 

  1. Find areas of consolidation, the red dots
  2. Look for momentum to break out in direction of trade
  3. Confirm higher time frame


To conclude, I just anticipate a move above the zero line and place trades in the options markets for the direction I think the market is heading.

Study this lesson again, and see if you can put any of this knowledge to use come next week.

Author: Ben Sturgill