Public trading strategy
Biotech hit with federal lawsuit over fake revenue — short the crash
Thesis
Lawsuits alleging fake revenue numbers almost always trigger a panic sell-off as investors run for the exits to avoid the unknown. Even if the company eventually defends itself, the stock price usually gets dragged down by the bad headlines and uncertainty in the short term. This makes it a prime candidate to bet against as the selling pressure builds.
Strategy approach
Build a bearish momentum strategy on ADMA using the 1-hour timeframe. Enter short when price breaks below the VWAP and the 20-period EMA crosses below the 50-period EMA. Exit the trade for a profit if price reverses to touch the 50-period EMA, or cut losses with a 3% stop if the stock suddenly rallies.
Markets and timeframes
ADMA1H