Overbought Calithera Biosciences Inc (CALA) Plunges Ahead of Earnings

Wall Street is reacting poorly to Calithera Biosciences Inc's (CALA) latest drug data

Nov 9, 2015 at 11:31 AM
facebook X logo linkedin


Calithera Biosciences Inc (NASDAQ:CALA) is getting pummeled, with JMP Securities analyst Michael King attributing the plunge to the company's weekend presentation of data on CB-1158, a cancer drug. At last check, the shares are down over 16% at $8.40. This represents quite the turn for a stock that's been sizzling on the charts in recent months.

Prior to today, CALA had more than doubled since hitting a record low of $4.31 in late August. On a relative-strength basis, the shares had outperformed the broader S&P 500 Index (SPX) by 87.3 percentage points, when looking back 60 sessions. As such, the equity's 14-day Relative Strength Index (RSI) was sitting at a lofty 80 -- in overbought territory -- which could play a role in today's drop.

Far from spooking short sellers, the steep ascent has actually triggered a rash of bearish betting. Short interest is currently just off record levels, with more than one-fifth of CALA's float sold short. At the stock's typical trading volumes, it would take over two weeks for the shorts to cover their positions. Today's plunge is a welcome development for these bettors, though the stock is currently short-sale restricted.

Digging deeper on the charts, CALA's earlier losses were contained by their 60-day moving average. Now, the shares are trying to maintain a foothold atop their 20-day trendline, which has acted as support since early October.

It's not clear how long that foothold will last. Calithera Biosciences Inc (NASDAQ:CALA) is scheduled to report third-quarter earnings tonight, and last time around -- the company's inaugural turn in the confessional -- the stock plunged 13.4% in the ensuing session. Based on near-term at-the-money straddle data, the options market is predicting a more than 20% post-event move.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI