Hello Trader,
Yesterday, while the overall market was a sea of red, one stock impressively outperformed the market and topped the Top Gainers list on Finviz.
PharmaCyte Biotech (NASD: PMCB) closed the day up $6.48 points, or 189.47%.
The move in PMCB is especially impressive considering the overall market was down 1.09% yesterday.
After coming into the resistance of the upward channel, the market has since pulled back towards support.
The result of resistance found in the market and supply outweighing demand in the short term has been a sea of red across all sectors.
The below performance map from Finviz perfectly reflects the selling seen across all major stocks, sectors, and industries yesterday.
With this red wave taking place yesterday, it is surprising and impressive that PMCB was able to outperform to the extent that it did!
What is PMCB?
PharmaCyte Biotech, per Yahoo Finance, focuses on developing and commercializing cellular therapies for cancer and diabetes in the United States.
The company’s cellular therapies are developed based on Cell-in-a-Box, a proprietary cellulose-based live-cell encapsulation technology used as a platform to treat various types of cancer, including advanced and inoperable non-metastatic pancreatic cancer as well as diabetes.
The company is developing therapies for pancreatic and other tumors, including encapsulated genetically modified living cells. It is also developing a therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes; and therapies for cancer-based on the constituents of the cannabis plant.
Market Cap: 50.9m
Float: 1.59m
Average Volume: 3.88m
Shares Outstanding: 5.14m
Yesterday shares of PMCB soared 189.47%, and on the week, the stock is up 246.15%.
So what was the catalyst behind the move?
On the 16th of August, the company released a statement from its CEO regarding its recent listing on Nasdaq and its current business focus.
The CEO said that being a Nasdaq listed company will help elevate the company’s public profile, expand shareholder base, improve liquidity and enhance shareholder value.
The CEO also mentioned that after completing a reverse stock split, the company was able to attract many institutional investors who were interested in the company’s unique technology and extremely low float.
Important colors and updates were provided in the statement. The CEO said, per Yahoo, “In Q4 2020, we assembled a team of regulatory and scientific experts to work through the U.S. Food and Drug Administration’s (FDA) clinical hold requests to achieve an open Investigational New Drug Application (IND). Our current focus is to comply with the FDA’s requests as soon as possible. When we make significant progress towards that goal, we will advise our shareholders and the investment community.”
What caused the initial move higher?
As I pointed out above, there was indeed a catalyst. In this case, it took a couple of days for the positive statement released by the company to do its rounds and gain traction.
The recipe for a short squeeze existed. To quote the CEO, “extremely low float.” PMCB stock could have been easily shorted yesterday and having an incredibly low float of under 2m shares created the perfect storm.
After making an impressive move in the pre-market, the shares pulled back before the market opened. As the market opened, demand swept in, and as the stock took out the pre-market high. Shorts panicked, and the stock went limit up.
The stock went limit down twice throughout the day but never held below $7, which is key support. $7 is critical support as this was resistance in the pre-market. This level was tested multiple times throughout the day and continued to hold up firmly.
What’s Next?
For today, the key levels and areas that I will be watching are the following:
- $7 Support Level
- $8- $9 resistance turned into support.
- $11.27 after hours high
If the stock continues its momentum higher, I believe that a higher low above $8 – $9 would be ideal. Below $7 and holding firmly below, the momentum might shift to the downside. For the squeeze to continue, the stock would need to hold firmly above prior resistance and then push above the after-hours high of $11.27 and base higher.
