ARAI's dip below the 50-day MA looks like a shakeout/spring setup; bullish outlook contingent on recovery.

and I want to look at Aruka Therapeutics, biotech company. For whatever reason, when I see Aruka, I think of uh Orca, the killer whale, I guess. Anyway, I don't know why, but this biotech company isn't that. Uh it could be a bear killer though.

this stock has been on a real tear for a while. Uh we got we jumped into here uh way back when. We got a really, really good entry right on this breakout in March. Uh super high volume.

It was actually the first big volume spike in a long time since this one. And if you kind of took these out of the equation, um you'd see that this was actually uh a pretty monster uh pretty monster move.

And so, uh we got into this right. These stops here are these red um the red text is all the R multiples that we had. That's the reward versus risk. So, uh we were getting a crap load of reward for every dollar that we took uh selling half and then finally out.

Um so, we got a really, really nice trade on this.

But, uh that was then, this is now. And the reason I'm pointing this out is because on uh Friday, it did fall below the 50-day moving average. And for a lot of traders, for a lot of traders, that means that, by golly, um you you got to get out of you got to get out of this right away.

Um and that's really not uh that's really not a good way to go because you can often get these shake outs.

I mean, stocks that are in really, really good stocks that are in really, really good uptrends, they're in those uptrends for a reason, and that's because institutions are buying the stocks.

And sometimes um the stock can come back down here, and this can be uh I don't know, you can call it a liquidity grab. Um you could call it a stop raid. Uh whatever you want to call it, but what can happen is uh these buyers will allow the stock uh to drift down, trigger stops.

This one's a biggie because a lot of traders will put their stops right at or a little bit below the 50-day moving average. All the while, the buyers are still there. They're just not buying right now.

And so, you don't really know whether this is a shakeout or not until at least this, until at least this day. But it's sure looking like that could be the case because you get almost twice average volume.

And after this kind of pullback, uh you get a high close uh relative to the intraday range, probably up above uh probably around the top 20% or whatever of the range. So, this is a hammer pattern or a hammer uh candle.

And the term hammer comes from hammering out a base.

So, in my view, you can you can be a little aggressive here because the stock's below the 50-day moving average. But, right now, um this stock closed about 7 and 1/2% above the intraday low.

Uh if you're buying this stock anticipating this shakeout, and by the way, it might not be a shakeout, you we don't know, but this is a shakeout setup. This is a slingshot, okay?

This is a spring, as Wyckoff would call it. Um so, it is looking good.

What you may want to do is wait for the stock to cross above the 50-day moving average. That'd be about 94 uh 75, something like that. Uh if it crosses above that, that's when you want to get into the stock and just keep uh I wouldn't give it more than 4 4 and 1/2% on this. 5% at the outside.

Uh because if this does hold above here, this could give you a pretty nice run.