Calithera Biosciences Inc: A Big Bounce Could Be Brewing
António Costa | Jul 18, 2016 01:42AM ET
Calithera Biosciences Inc (NASDAQ:CALA) is one for the bottom pickers. The stock has had a rough time over the past weeks but the selling pressure seems to have dried up. The selling that brought the stock to $3.24 has slowed, and since last week the accumulation has been building. Strong volumes and sharp volatility indicate investor uncertainty which often precedes a trend change. In my view, the stock has formed a bottom and I expect a move past 3.66 to take the stock towards the target of 4.20 with stop-loss at 3.20. From a technical standpoint, there are some signs of an imminent bounce due to the positive divergences (MACD Hist, RSI & CMF), which often leads to short covering. Plus, the Parabolic SAR triggered a Buy signal for the first time since May. Fundamentally, the stock seems to be undervalued at current levels with a good balance sheet and zero debt. The percentage of shares held by institutional and mutual fund owners is 75%. A big bounce could be brewing.
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