VKTX Trade on Dec 19, 2022 10:18 from BanalityOfEvil: Tradervue User Stock Trades.

VKTX – Intraday trend sympathy long

CATALYST

VKTX is trading in sympathy with MDGL in regards to potential buyout rumor by MDGL

Viking Therapeutics Inc (NASDAQ:VKTX) shares are trading higher Monday, in sympathy with Madrigal Pharmaceuticals Inc (NASDAQ:MDGL), which announced a successful trial of resmetirom for nonalcoholic steatohepatitis (NASH) and liver fibrosis.
What Happened: Madrigal highlighted positive topline results from the pivotal Phase 3 MAESTRO-NASH biopsy clinical trial of resmetirom. Madrigal said MAESTRO-NASH achieved both liver histological improvement endpoints that the FDA proposed as reasonably likely to predict clinical benefit.
Madrigal intends to file a new drug application seeking accelerated approval of resmetirom for the treatment of non-cirrhotic NASH with liver fibrosis.
Viking Therapeutics could be viewed as a potential buyout candidate following the strong Phase III trial results from Madrigal. Viking’s VK2809 belongs to the same family of medications as resmetirom.

TRADE IDEA

VKTX could trade intraday in sympathy with MDGL

SETUP QUALITY

C – seems like a longshot play, but VKTX is making new highs on the daily chart and MDGL is moving cleanly/trending higher

• Float 74M
• Highest volume day in the past year
• Labeled as a potential sympathy play with MDGL
• Gapper, sold off hard in premarket, but reclaimed $6 on the opening drive, putting in massive buying volume

BIG PICTURE

Markets continue sell off, Bearish conditions, market bounce failure on the open

PLAN

Get long VKTX above vwap at this consolidation and monitor MDGL for signs of failure/continuation

REASONS TO SELL

MDGL begins to breakdown
VKTX breaks its trend
Stopped out; VKTX breaks vwap to the downside and holds

EXECUTIONS AND PRICE ACTION

Consolidation area was not clean, putting in some topping wicks above vwap buy MDGL was trending higher and showing a lot of strength, got long here

KEY TAKEAWAYS

extremely poorly planned. just jumped in and tried to figure it out after the fact.

Got involved too late on this. Price was deviating from MDGL after entry. I knew that the spot which confirmed true weakness in vktx could be a break and hold below 5.50. I was planning on holding this throughout the day, but I could not justify drawing down into 5.50 and then have a possible capitulation to the downside which could result in a even larger loss. Decided to cut when vwap was broken to downside. Not surprised to see this move back up to 7. cutting was the correct choice.

This was a highly speculative play from the get-go

This would have been worth holding if I had been watching it more closely on the open and saw all the buyers stepping in, but I had already taken it off my watchlist for the open due to premarket sell off

Should have just avoided getting in so late. FOMO entry.

upon review of weekly chart, I would not have entered this if I had seen all the resistance above 7.

I will add a weekly chart to my research screen to avoid this type of trap in the future