Avacta: will Covid-19 test end bumpy ride for this stock?
It's been a bumpy ride for this biotech firm. Our chartist looks for potential long-term gains.
23rd September 2020 09:54
by Alistair Strang from Trends and Targets
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It's been a bumpy ride for this biotech firm. Our chartist looks for potential long-term gains.
Avacta (LSE:AVCT)
Despite the prime minister effectively cancelling Christmas, it became pretty evident he's desperately hoping for a fast, efficient, and accurate method of testing for Covid-19.
As a result, we thought we'd better revisit one of the companies we previously reported on in May, Avacta (LSE:AVCT), which will launch a Covid-19 test.
We wonder why the UK does not already employ similar tests used in Italy, ones which feature a 15-minute delay at the airport while awaiting the test result?
However, internet chatrooms are alight with speculation about some near-term share price optimism amongst companies involved in the testing sector, thanks in no small way to Boris's speech to the nation on Tuesday.
In the case of Avacta, we've slight hesitation in embracing optimism, due to the share price failing (just) to reach our previous secondary target level of 226p.
A lunge at 215p was hopeful, but failing to reach this target level carries the threat of inherent weakness.
Presently, the share requires to trade below 150p to justify serious concern, this allowing weakness to establish toward an initial 137p with secondary, if broken, at a bottom (hopefully) of 117p.
However, if the man who killed Xmas has just delivered an early present to traders, we shall be inclined to optimism at any movement next above 177p as this calculates with the potential of a visit to an initial 196p.
If exceeded, our secondary works out at 219p, a visually pleasing number marginally higher than achieved in May and taking the share price into a region which promises substantial longer-term gains. As always, it's ‘fingers crossed’ time.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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