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Genetic Technologies Limited (GENE) - A Cure For the Summertime Blues
By James E. Brumley
May 15, 2013 10:15:32 AM PDT | 29 View(s) | No Comment(s) -StockHQ:GENE$3.00 +$0.54 +21.95%
James E. Brumley

If you're looking for a stock that's got a good shot at beating the summertime blues (i.e. a lethargic market), then Genetic Technologies Limited (NASDAQ:GENE) on your radar. The stock was stuck in a rut beginning in December - after a sizable pullback in November - but the action we've seen from GENE over the past four weeks suggest this little biotech name is itching for a rebound.

GENE is, in simplest terms, a genetic testing technology corporation. It offers more than 2000 DNA tests that can confirm (or rule out) a specific genetic disorder - symptoms don't need to be observed, and a lack of symptoms doesn't preclude an accurate positive reading. Genetic Technologies Limited's BREVAGen test for breast cancer vulnerability may be its best-known diagnostic technology, though uterine cancer and epilepsy tests are near the top of the company's menu too.

Genetic Technologies Limited isn't a profitable company yet. And, it won't be anytime soon, based on its current revenue trajectory and prospects. Then again, it doesn't matter - plenty of biotech stocks rally on the long-term prospects of their technology, or even the mere possibility of a buyout waaaaayyyyy down the road. GENE appears to fit that bill right now.

Of course, it's not that the company doesn't have fodder to keep newcomers interest in buying the stock. GENE announced it was feeling good about a key patent re-examination in March, and entered an agreement with healthcare provider network for BREVAGen earlier this month. And, that all unfurled within just a few months of a new CEO taking over the helm.

Of all the reasons to get excited about the foreseeable upside of Genetic Technologies Limited, however, the chart's the biggest one.

Beginning in mid-April GENE started taking swings at a breakout move. The first two surges were overdone, sending the stock back from whence it came once the 200-day moving average line (green) was brushed. But, the current third rally is materializing at a much more stable and sustainable pace, using the 20-day, 50-day, and 100-day moving average lines as pushoff/support levels (as they should in a budding bull trend). While it would be nice to see Genetic Technologies walk above the 200-day moving average line before jumping on board, waiting may also leave a little too much money on the table. The risk/reward scenario looks favorable as things are right now.