GALE/QCOR Pair Update

Gale was brought up on Feb 2. as a pair trade to a QCOR short. At the time GALE was at $.88.

Here's the QCOR Trade Idea...

The idea is to buy GALE long and short QCOR, they are both in the biotech sector, it's kind of a hedged trade.

GALE made up to 58% as of yesterday at the intraday highs and is at a profit on a pullback today of 24%.

I liked the idea of a phased entry in QCOR on the short and GALE long, of course GALE is much more speculative so the position size should be smaller and treated as a speculative trade.

 Here's GALE's daily chart, as mentioned earlier today, biotechs are pulling back, so if you didn't take the trade and maybe are interested, you may get a chance to buy GALE on a pullback, just remember that unlike QCOR, it is a speculative position.

 As you can see, the first pullback is usually to the 10-day m.a. in yellow, subsequent pullbacks tend to be deeper, probably between the 10 and blue 22 day, but possibly as deep as the 22 day, much beyond that and we need to re-evaluate the position.

 This is the stop I'd suggest, a 1 day Trend Channel which on a pullback with it still rising right now, would probably be in the $.80 area, but it rises more each day and tomorrow it will be even higher.

 The daily GALE 3C chart seems like it can support a bigger move in GALE, although how you chose to manage the trade (trade around pullbacks are just hold) is up to you and your risk tolerance. When market conditions change, that will also have an effect on long positions so stops may need to be tightened in that scenario.

 GALE is pretty much in line on the short term charts so I would expect the pullback /consolidation to continue, it has had a big move in a few days and those gains need to be digested and the weak hands need to be shaken out.

 This is the long term daily QCOR chart, there's an obvious problem here that can be seen in the changes in volatility, tops get very volatile. There's also an RSI divergence in place. The long term target for QCOR is around $20, but they often overshoot those targets so in the mid to high teens is realistic.

 We wanted to phase in to QCOR and add on strength and then add the last part of the position on confirmation, a break below the 150-day moving average would be pretty good confirmation to add the last portion, whether it be in 1/2 , 1/3 or 1/4 entries. Today looks like a decent day to add or start phasing in if you didn't already on yesterday's strength.

 The daily QCOR 3C chart also shows problems with QCOR, thus the basis of the long/short pair trade, although either trade can be taken independently.

Looking at QCOR's volatility and hoping to capture a trend to $20, I think a 2-day Trend Channel which is a bit wider is a better stop then a 1--day.

 If you have any questions of either, just shoot me an email.