I Found a Stock With a Picture-Perfect Chart. Here's My Trading Strategy.
Let me take you through process I took in finding and then initiating a new idea for my portfolio.
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Technology stocks are under heavy selling pressure again on Tuesday. The Nasdaq 100 (QQQ) is testing support at the 50-day simple moving average and barely holding on so far.
The Magnificent Seven is down 1% and the most discouraging development is that traders are not chasing Palantir (PLTR) despite exceptional earnings and guidance. There is still a morning gap, but the stock is $10 off its $165 opening price.
As I mentioned Tuesday morning, the biggest problem for Palantir and other big-cap technology stocks is valuation. They are not cheap, and that is what is causing an internal rotation in the AI group. The software names are under pressure again. Nvidia (NVDA) is struggling, but Alphabet (GOOGL) is emerging as the leader.
Overall market breadth is not bad, with 58% of stocks green. The Russell 2000 (IWM) is up 0.5% and biotechnology (IBB) is attracting interest again. I’m looking for new ideas and going to outline a little of my trading process.
The Search for New Ideas
As an active and aggressive trader I spend most of my time doing two things. The first is managing my existing positions and the second is looking for new ideas.
I currently hold around 50 positions of various sizes in long-term investment accounts, client accounts, and short-term trading accounts. I am constantly reviewing these positions and adjusting my risk exposure depending on market conditions, news flow, earnings reports, and a host of other issues.
The fun part of my job is looking for new ideas. I am a voracious reader of financial media like TheStreet Pro, but I also review social media and am constantly looking at charts. I find new ideas in a variety of ways, but typically it starts with a good chart setup. Once I spot a "good" chart, I dig deeper into fundamentals and look for potential catalysts that will move the stock.
Spotlight on Cullinan Therapeutics
An example of a new idea that I just picked up Monday is Cullinan Therapeutics (CGEM) . James Koford, a certified financial planner who works with me at Hammerhead Financial Strategies, pointed out the chart that he uncovered in a scan that looks for promising patterns.
Although opinions will vary about what constitutes a good chart setup, I found this one particularly appealing.
Just on its own, that chart is good enough for me to make an initial buy, but the next step in the process is to learn more about it and craft a plan for how aggressive I will be and how to handle it as it develops.
Strong Analyst Conviction
The first thing that caught my eye was that TheFly.com reported a new initial buy recommendation for CGEM on Monday. Guggenheim initiated coverage with a Buy rating and a $30 price target. The firm sees an attractive entry point ahead of an "important year" of Phase 1 data catalysts for T-cell engagers in autoimmune diseases and acute myeloid leukemia (AML).
So now we have a good chart and a very bullish analyst recommendation to go with it.
The next step is to look into how other analysts view the company. According to TipRanks, based on 10 Wall Street analysts offering 12-month price targets for Cullinan in the last three months, the average price target is $31.50 with a high forecast of $38.00 and a low forecast of $24.00. The average price target represents a massive potential gain from the current price level.
Identifying Clinical Catalysts
That is good enough for me to establish an initial position, but now I want to look at what might move this stock. What are potential catalysts and what are the risks? This is a biotech name and they are notorious for binary events.
Digging into catalysts is the hard part of research. It requires understanding the company, and in biotechnology, that can be quite difficult if you don’t have a scientific background. There are several catalysts likely to hit fairly soon. Cullinan’s partner, Taiho Oncology, is expected to complete the rolling New Drug Application (NDA) submission for zipalertinib this quarter.
The second catalyst is the CLN-978 initial data readouts expected in Q2 2026. This is arguably the highest-conviction catalyst in the pipeline for autoimmune diseases. The company plans to share initial safety and B-cell depletion data for both Rheumatoid Arthritis (RA) and Systemic Lupus Erythematosus (SLE). Positive data would validate the pivot into the "hottest" sector of biotech right now, which is why analysts are so bullish.
On top of these positives, the company reported roughly $439 million in cash as of late 2025. Management explicitly stated this provides a runway into 2029, which significantly reduces the immediate threat of a dilutive secondary offering.
The Game Plan
I have my initial position, and my immediate goal is to try to catch a breakout move for a short-term trade and then build up the position further as investors start to contemplate the upcoming catalysts. I will hold a core position and also trade it in a variety of different time frames.
At the time of publication, Rev Shark was long CGEM and GOOGL.
