At least from an analytical standpoint, Ocugen (NASDAQ:OCGN) is for me becoming a cryptocurrency. What I mean by that is it’s incredibly difficult to predict the trajectory of OCGN stock.
At one point, evidence indicates that shares are about to move in a particular direction, only to be thrown in the opposite direction because of a game-changing news item.
For digital assets, that news came from e-commerce giant Amazon (NASDAQ:AMZN), where rumors suggest that the company is mulling incorporating crypto payments and issuing its own virtual currency. For OCGN stock, the potential upside catalyst is from the worrying delta variant of the SARS-CoV-2 virus. With the novel coronavirus pandemic taking an ugly turn, it could boost Ocugen shares.
Early in July, I warned that the “risk-reward profile for OCGN stock is not favorable for the bulls.” Technically, I wasn’t wrong. My article went live on July 6, where OCGN closed at $7.53. Shares are now at nearly $7.
But am I patting myself on the back for the call? Absolutely not. Assess the markets for a living for long enough and you’ll realize that no one has a perfect beat on capital valuations. At the end of the day, the market does its own thing.
More importantly, OCGN stock finally has fundamental support to believe in, at least somewhat. I’m not going to reverse my overall opinion on Ocugen. I think it’s a risky trade no matter what and prospective speculators should only put down money they’re comfortable losing.
Nevertheless, rising cases suggest that people are getting concerned about the delta variant, even those who are or promote anti-vaccination stances or conspiracy theories. Thus, the backdrop could be game on for Ocugen.
A Possible Charting Breakthrough for OCGN Stock
Adding to the enthusiasm for this longshot biotech firm which is now suddenly on many people’s radar is a possible bullish setup for OCGN stock. While I don’t want to overstate the situation – remember, this is an incredibly volatile trade – I also don’t want to ignore it.
First, it’s possible that OCGN stock is charting a bullish pennant formation, which is a phenomenon where bulls and bears engage in a fierce negotiation that eventually culminates in a supposed stalemate as the price action narrows to a fine print. But it’s only temporary as this apex point results in either a breakdown or a breakout.
Obviously, those who have a glass half-full perspective anticipate a move higher. It’s possible, though I’m not guaranteeing it, that OCGN stock could swing upward, especially based on what’s happening with the pandemic.
Second, shares have charted a series of higher lows since the bottom of April 20, when they closed at $5.52. Subsequently, OCGN stock has hit these rising lows:
- $6.13 on June 14
- $6.35 on July 15
- $6.82 on July 26
- $7.06 on July 28
Presumably, the bullish setup will be in play so long as OCGN doesn’t drop below $6.35. Or if it does, it’s important that shares don’t stay deflated for too long. But is it worth gambling on this technical interpretation?
Obviously, it depends on a trader’s risk tolerance. However, I’m not exactly gung-ho on the idea. While it’s true that the worsening pandemic provides a cynical tailwind for OCGN stock, we should note that Covid-19 vaccines from various companies have long been freely available to Americans.
I mean, if you want to get vaccinated now, you don’t have to have an appointment nor do you have to pay. Yet despite this abundance, vaccine providers couldn’t give the stuff away. Fundamentally, that’s not great news if you’re trying to promote yet another Covid vaccine in the U.S.
A Spiraling Crisis Is Also Not Guaranteed
Finally, an important risk factor to consider for OCGN stock is that the pandemic might not devolve into another catastrophic event. Instead, we may turn a corner in this latest surge in a few weeks.
That’s according to Dr. Scott Gottlieb, former Food and Drug Administration commissioner. In an interview with CBS News, Gottlieb believes we may be further along in the crisis than new infection data suggests. If so, we may be closer to the end of the tunnel than we might think.
Of course, that would be amazing news for society. For OCGN stock? Not so much.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
