Is ALZN the Next MRNA?

Of course, it isn’t. 

ALZN closed the day up 28.33% on Tuesday, while MRNA was up a measly 1.90%. 

So, for now, it appears that momentum favors ALZN, and perhaps similar momentum could spill over into more small-cap biotech stocks.

On Tuesday, I wrote about a change in the penny stock market that I am noticing. 

I notice more opportunities daily, and certain types of stocks are beginning to wake up from their summer lull.

On Tuesday, I closed a successful long in a stock that acts as an excellent example of this.

The price action of the stock and other small-cap biotech names I have seen lately is making me confident that small-cap biotechs might be firming up. 

The signs that I see that are giving me the confidence that small-cap bios might be firming up are:

• Sustained volume increases
• Consolidation breakout patterns
• Higher Highs and Higher Lows
• A breakout above crucial moving averages
• Price firming up and holding above critical levels, post-breakout

As I mentioned, Tuesday’s trade was an excellent example of the above, and it was also great to see some good continuation in a small-cap biotech stock, which I haven’t noticed too much recently.

Alzamend Neuro Inc. (ALZN)

ALZN, according to Yahoo, is a preclinical stage biopharmaceutical company. The company focuses on developing products to treat neurodegenerative diseases and psychiatric disorders. The company’s lead product candidate is AL001 to treat Alzheimer’s and other neurodegenerative diseases and psychiatric disorders. It is also developing AL002, a cell-based therapeutic vaccine, which seeks to restore the ability of the patient’s immunological system to Alzheimer’s. 

At the time of writing, the stock is up 43.93% on the week, largely thanks to Tuesday’s strong performance, which saw the stock close up 28.33%.

ALZN, according to Finviz, has an average target price set by analysts covering the name of $11.50.

Market Cap: 277.35M

Short Float: 3.79%

Float: 44.53M

Upcoming Catalyst:

• Alzamend Neuro Announces Date for Delivery of Topline Data for Phase 1 First-in-Human Clinical Trial for AL001 for Dementia Related to Alzheimer’s

The Trade

Firstly, I liked the setup on the daily chart. After putting in a double bottom on the daily chart earlier in the month, the stock reclaimed the 20d MA. Three days ago, the stock broke above the 50d MA and held above it.

That setup and price action alerted me to a possible continuation play in this biotech name, along with a possible consolidation breakout pattern.

With the upcoming catalyst of Phase 1 news expected sometime this month, this is also an excellent example of a possible anticipation trade, as traders might be anticipating positive news, which might have led to some of the momentum seen in the stock.

I entered the trade three days ago at $2.36 as the stock was holding above the previous day’s high and continued to hold firmly above both the 50 and 20d MA.

I was targeting the highs $2s into $3 as that was where resistance had previously been found.

On Tuesday, I sold the stock at $2.85 as it approached the daily chart’s target levels and resistance area.

This is an excellent example of a continuation breakout in a small-cap biotech company with an upcoming catalyst.