Longboard Stock Rockets 316% on Positive Data | Momentum Investing

This week, the market entered a state of adjustment. It is partly due to this: Apple (AAPL) is down 1.2% after being downgraded by Piper Sandler to Neutral from Overweight; American Express (AXP) is up 1.0% after being upgraded by JPMorgan to Overweight from Neutral; Eli Lilly (LLY) is up 1.2% after announcing LillyDirect, whereby patients can obtain obesity, migraine, and diabetes medications direct from Eli Lilly, and Walgreens Boots Alliance (WBA) is down 2.2% after topping fiscal Q1 expectations and slashing its dividend by 48%.

There are some macro drivers in play today as well. Energy prices are up on geopolitical angst and Treasury yields are higher on rate-cut angst. That is, there is some budding angst that the Fed might not cut rates as much as expected.

Momentum Investing

On paper, momentum investing seems less like an investing strategy and more like a knee-jerk reaction to market information. The idea of selling losers and buying winners is seductive, but it flies in the face of the tried and true Wall Street adage, buy low, sell high.

Momentum investing is a trading strategy in which investors buy securities that are rising and sell them when they look to have peaked.The goal is to work with volatility by finding buying opportunities in short-term uptrends and then sell when the securities start to lose momentum.Then, the investor takes the cash and looks for the next short-term uptrend, or buying opportunity, and repeats the process.Skilled traders understand when to enter into a position, how long to hold it for, and when to exit; they can also react to short-term, news-driven spikes or selloffs.

Risks of momentum trading include moving into a position too early, closing out too late, and getting distracted and missing key trends and technical deviations.

Top Gainers of  This Week

Explore the market movers and top stock gainers in the US stock market, capturing notable surges in stock prices. Stay informed about these movers, leveraging real-time data and historical trends to make informed investment decisions.

Longboard Pharmaceuticals on Tuesday posted positive top-line data from the Phase Ib/IIa PACIFIC study, showing that its investigational 5-HT2C receptor superagonist bexicaserin can strongly reduce seizures in patients with developmental and epileptic encephalopathies.Longboard stock rockets 316% on positive data.

After 28 days, patients in the PACIFIC trial treated with Longboards bexicaserin saw a 53.3% drop in countable motor seizures, the studys primary efficacy endpoint. In addition, seizure frequency decreased by 20.8% compared to placebo, resulting in a placebo-adjusted seizure reduction of 32.5% in favor of bexicaserin.

Longboard CMO Randall Kaye in a statement called the early findings from PACIFIC exciting, setting bexicaserin up to become a clinically and commercially best-in-class product with the potential to redefine the standard of care in developmental and epileptic encephalopathies (DEE).

If you have a strong business, perfectly designed, expertly executed, then its share price can soar far above the market average, towards the shining sun of all time highs. But — just like Icarus — the wax can also melt and the wings also fail, and its price plummet, down and down to the waiting ocean. The moral of the story is: while top gainers can represent opportunities to trade bullish momentum, they can also represent a peak, and could just as easily see a future decline in share price. It's down to your skill as a trader to make the best call as to what the reality is most likely, based on all the information laid out before you.