What's Next For Immune Response?

10/18/04 03:50:57 PM

by Kevin Hopson

Keep your eye on some key price levels to determine which way the stock will move.

Security: IMNR
Position: Hold

Immune Response (IMNR) has seen its stock price drop significantly since the beginning of the year, as illustrated in the year-to-date chart (Figure 1). However, the stock has showed some life the last few months after bouncing off a double bottom in mid-August. Now that Immune Response has started to recover, what is next for the stock?

Well, if you look at the chart, you will note that the stock broke a double top in late September. In fact, Immune Response gapped above this resistance line, confirming an upside breakout in the process. During the breakout, Immune Response rallied all the way up to the $1.30 level, which is just below the 38.2% retracement ($1.32) from the April to August decline. Because retracement levels tend to act as reversal points, it is no surprise that Immune Response found resistance here.

Figure 1: Year-to-date chart for Immune Response

Graphic provided by: StockCharts.com.

Since then, the stock has proceeded to pull back, filling the gap from September's breakout in the process. In addition, prior resistance (dotted green line) is now acting as support, as those who previously sold resistance have been buying their way back in. Right below this support level is the 61.8% retracement from the August to September rally. As a result, the $0.88 to $0.93 range is key support for the stock. If Immune Response breaches support here, look for a potential pullback to the $0.80 level, which is the site of the 1B channel line.

On the flip side, note how Immune Response recently found resistance along the bottom parallel line of the blue pitchfork. If the stock can overcome resistance here ($1.05), prices could eventually make their way up to the $1.30 to $1.35 range. This is the site of September's high, the 38.2% retracement level from the April to August decline and the blue median line. In addition, short interest for the stock remains high at roughly 4.5 times normal daily volume. As a result, there is a lot of potential buying pressure to push prices higher.

Kevin Hopson

Kevin has been a technical analyst for roughly 10 years now. Previously, Kevin owned his own business and acted as a registered investment advisor, specializing in energy. He was also a freelance oil analyst for Orient Trading Co., a commodity futures trading firm in Japan. Kevin is currently a freelance writer.