On Tuesday, the stock of the Spanish pharmaceutical company Pharma Mar SA (BME: PHM) had moved sharply to the upside. This was after the news release that the Plitidepsin, which is a component of the company’s Aplidin drug, is able to significantly reduce the amount of COVID-19 in the lungs. The drug blocks the protein, which the COVID-19 virus uses to reproduce and infect other cells, and doesn’t allow it to spread further. The effectiveness was at 99%, which is a fantastic result. However, human trials are needed, as the initial test were made on animals. The company now seeks approval for conducting human trials.
Today, the stock is retracing lower, however, if the company is given the green light to commence with its human trials, we might see the stock pushing slightly higher again. If those trials prove to be successful, the share price may continue pushing further north at later stage.
Looking at the technical picture of PHM on our 4-hour chart, we can see that Tuesday’s buying interest is fading away. That said, because of the positive news that surround the company currently, this decline might be seen as a temporary correction. If the stock stalls somewhere near the 99.15 hurdle, marked by the high of November 30th, that may attract the interest of some new buyers. If so, PHM could rise back up, potentially making its way to the current highest point of January, at 115.70. If the buying continues, a break of that barrier would confirm a forthcoming higher high and clear the path to the psychological 120.00 mark, or even to the 123.20 level. That level is marked by an intraday swing low of November 9th, 2020.
Alternatively, if the current correction continues a bit further, below the 97.00 zone, which is marked by the low of January 26th, that could send the stock even deeper to the downside. The share price may fall to the 91.10 hurdle, or to the 86.95 level, marked by the low of January 25th. Around there, PHM might get held by an upside support line, drawn from the low of December 24th, potentially falling back under the radar of the buyers.
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