12-13-09 - Cytori Therapeutics (CYTX): The Perfect Chart

After doing my daily stock scans, I figured I'd do another "perfect chart" post. My last perfect chart selection, American Lithium Minerals (AMLM.OB) tanked shortly after I posted about it. Remember, these perfect chart stocks aren't necessarily sure fire buys, but represent stocks that you might want to follow due to the strong upward trends.

The Perfect Chart: Cytori Therapeutics (CYTX)

Cytori Therapeutics, Inc. develops, manufactures, and sells medical technologies to enable the practice of regenerative medicine. The Company’s commercial activities are focused on cosmetic and reconstructive surgery in Europe and Asia-Pacific, and stem and regenerative cell banking (cell preservation) worldwide. Its product pipeline includes the development of new treatments for cardiovascular disease, spinal disc degeneration, gastrointestinal disorders, liver and renal disease and pelvic health conditions.

Cytori's initial run about a month ago coincided with a press release announcing that the company had completed its enrollment in a 70-patient, international breast cancer reconstruction study called RESTORE 2. The study is evaluating the use of cell-enriched fat grafting to restore functional and cosmetic deformities in women who have undergone partial mastectomy for early breast cancer. Interim results were scheduled to be released 12/12/09 at the San Antonio Breast Cancer Symposium. In the past month while waiting for the results, CYTX has basically doubled. See the chart below for this phenomenal run:

As one might have expected, the results of the study released this weekend were highly positive. The tests demonstrated that cell-enriched breast reconstruction achieved a high rate of patient and physician satisfaction and improvements in overall breast deformity in lumpectomy patients.

The question now is where does the stock go from here? Breast cancer and the reconstructive aspects of it has a massive worldwide market. So, one might initially think that the stock should continue to rise after such great results. However, this scenario also sets up perfectly for a classic "sell the news" outcome. If the stock continues to run Monday on high volume late into the afternoon, it could be poised for new highs. If there's a huge sell-off, consider it the "perfect short".