Minerva Neurosciences, Inc. [NASDAQ: NERV] was a big gainer on Monday trading, closing the day with gains of roughly 40%. This followed news that the company’s insomnia treatment met primary and secondary objectives. The treatment is able to induce sleep and extend sleep duration. From a look at the daily chart, this bullish momentum could possibly sustain in the day. That’s because, after a huge bullish reversal at $5.35 in pre-market trading yesterday, the stock went on a bullish rally, forming a higher low at $5.61. The key thing to look for is where the stock opens today, and how it trades coming out of the gates, as it is already trading in pre-market right now. In pre-market trading, NERV has eased up and is down a little around the $5.80 ish range. If it opens Tuesday’s trading above yesterday’s close of $5.93, it could possibly trade in the green today and make another move short term.
Bullish momentum could be sustained by the magnitude of the breakthrough that NERV announced yesterday. That’s because, the incidence of insomnia all across the world is quite high. In the U.S, the number of people suffering from acute insomnia is quite high. This means that with a treatment that works, NERV could see a huge increase in revenues from this treatment. It gives NERV room to grow in value going into the future, as its books improve.
At the moment, the company’s books are in the red on all key indicators. For instance, its net income stands at -53.60 million. The earnings per share this year show roughly -20%. These numbers are likely to change with this breakthrough into insomnia treatment, making the stock potentially react differently over the long haul.
At the end of the day, it always comes down to the chart with trading stocks. The charts don’t lie. The charts tell the TRUE story of the companies. Trade the charts and NOT the stocks.