Alector, Inc. (NASDAQ: ALEC) operates as a clinical-stage biopharmaceutical company, which engages in pioneering of immuno-neurology. It develops a portfolio of innate immune system programs, designed to functionally repair genetic mutations and enable the rejuvenated immune cells to counteract emerging brain pathologies.
Take a look at the 1-year chart of ALEC below with added notations…
ALEC was hit pretty hard from mid-2020 until last winter, ultimately finding bottom and rallying up on top of a $15 support (green). The stock tested that level once again last week. Another rally could start from the stock’s current position, but a break of $15 likely means much lower prices for ALEC.
A trader could enter a long position at or around $15 with a stop placed under the level. If the stock were to break below the support, a short position could be entered instead.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT