As Awareness of the Symptoms of COVID-19 Increases, Eyes Continue to Focus on Ventilator Companies
Vapotherm, Inc (VAPO) is a global medical technology company that produces Hi-VNI technology that is used to treat patients from respiratory distress. This news places the company in a good position considering the report from the Journal of American Medical Association (JAMA) that showed 19% of diagnosed COVID-19 patients enter respiratory distress and require some form of oxygen support to live. While they lost money in their last quarterly report, they topped revenue forecasts and a potential increase in demand may even further boost profitability.
On March 12, 2020, VAPO began a significant rally that extended until March 17, when it gapped higher and faded to closer lower on the session. The movement, including the gap was on increasing volume. Following March 17, the price began to fall on declining volume and profit taking extended until Monday’s trading session.
This pattern is commonly referred to as bull flag. It’s characterized by a straight-line move (flagpole) in the share price followed by a consolidation forming a horizontal or downward sloping channel. The confirmation is a close above the channel on elevated volume.
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The target is the flagpole added to the breakout level. For VAPO, the move is $13 would be added to the breakout level near $13. That gives a projected target of $26, which is near its July 2019 high. For swing traders, targeting the recent high near $20 would make more sense as a point to take profits.
VAPO isn’t optionable and so there won’t be a suggested option opportunity, but the volatile nature of this stock still provides significant profit potential.