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One of the questions I get more than any other is, “Jonathan, how do you know these stocks will explode when you find them?”
The honest answer is, I don’t.
Nobody knows ahead of time that a stock is about to double. If someone tells you they do, I’d be skeptical. What you can do is learn to recognize when something deserves a closer look. That’s really what I’ve spent most of my career doing.
A few weeks ago, one of the companies we’d been following at my Masters in Trading LIVE show – uniQure NV (QURE) – nearly doubled after the U.S. Food and Drug Administration announced it was changing its position on one of the company’s drug candidates. Overnight, everybody wanted to talk about it.
What interested me wasn’t the move itself. It was what happened before the move.
For about a week leading up to that announcement, I kept seeing unusually large amounts of trading in the stock. Not random trades here and there, but the same kind of institutional big-money activity showing up over and over again.
That didn’t mean somebody knew what the FDA was going to do. Markets are rarely that simple. But it did tell me it was something worth investigating.
After almost 30 years trading futures and options on the floors in Chicago, I’ve learned that large institutional investors don’t spend millions of dollars casually. When they continue building positions in the same company, I want to understand what they’re seeing that the rest of the market isn’t seeing yet.
Sometimes you do all that homework and discover there’s nothing there.
Sometimes you find a stock that’s about to become the biggest story of the week.
That got me thinking this would be a good opportunity to pull back the curtain a little and show you how I look at biotech.
It’s one of my favorite areas of the market because it plays by a completely different set of rules than most companies people follow every day.
Today I’d like to explain what I mean by that, introduce you to three biotech companies currently on my watchlist, and show you why I think paying attention to institutional behavior can often tell you more than reading the headlines.
Biotech Lives on Its Own Calendar
One of the reasons I enjoy biotech so much is that it really doesn’t care about the same things the rest of the market worries about.
Let’s say during a week, the Federal Reserve surprises everybody, inflation comes in hot, and payroll numbers miss expectations. The stock market as a whole may drop, but biotech stocks will barely move.
Then an FDA decision comes out on a Tuesday morning and one biotech stock is suddenly up 60% before you’ve finished your second cup of coffee. That’s just the nature of the business.
These companies trade on catalysts like clinical-trial results, FDA decisions, and advisory committee meetings. Those are the dates that matter.
That’s why I spend so much time studying regulatory calendars and upcoming events. They tell me when I should start paying closer attention.
The company I mentioned earlier, uniQure, is a perfect example. For months, investors believed its Huntington’s disease treatment faced a difficult road after regulators questioned whether existing data would be enough.
Then the FDA changed its thinking after markets closed on Tuesday, June 16. Suddenly the company everyone had ignored became one of the biggest winners in the market.
UniQure closed that Tuesday at $26.99. Then it opened on Wednesday, June 17, at $43, touched $48.88 intraday, and closed at nearly $48. That’s an 81% gain, overnight.
Most investors focused on the FDA announcement.
I found myself thinking much more about everything that happened before it.
The Clues Usually Show Up First
When I went back through the trade, what stood out was how many clues had been sitting there beforehand.
Institutional investors had been building upside exposure through the trading market. Everything I was seeing in the trading told me sophisticated investors were leaning toward the upside, not preparing for the downside. That didn’t guarantee anything, but it definitely caught my attention.
That’s really the difference between investing and simply guessing.
I’m not trying to predict what the FDA is going to do. I’m trying to understand where sophisticated investors are placing meaningful bets before the broader market catches on.
Sometimes these smart money players are wrong. That’s part of the business.
But when an important catalyst is approaching, unusual institutional activity begins to appear, and the trading market starts telling the same story, I’ve learned it’s usually worth digging deeper.
The goal here is to build the habits that help you recognize tomorrow’s opportunity before everybody else starts talking about it.
Three Biotech Companies I’m Watching
Whenever a trade like that works, the next question is always the same: “So what’s on your radar now?”
The truth is, I’m never looking for “another” anything. Every company, every trade, has its own story.
But there are three biotech names I’ve been spending a lot of time researching because I think they deserve a closer look.
The first is Ionis Pharmaceuticals Inc. (IONS).What I like here is the calendar. Ionis has multiple potential catalysts over the coming months, which means investors aren’t depending on one make-or-break event. Just as important, I don’t think any trades out there have become overly expensive yet, which gives us more flexibility in how we approach the stock.
I’m also watching Celcuity Inc. (CELC). This one caught my attention because the stock sold off despite encouraging clinical results. Whenever I see a disconnect like that, I start asking why. Even more interesting, several well-respected healthcare funds didn’t head for the exits. They stayed with the company. When experienced institutional investors remain patient after disappointing price action, I think it’s worth paying attention.
The third name is Replimune Group (REPL). This is easily the highest-risk company of the three, and I’d treat it that way. But biotech has never been about certainty. It’s about probabilities. Replimune has meaningful catalysts ahead, and it’s another company where I’m seeing enough pieces come together to justify keeping it on my whiteboard.
Now, let me be clear about something. I’m not telling you these three companies are guaranteed winners. That’s not how biotech works, and it’s not how I trade.
I’m looking for situations where the science, the calendar, and institutional behavior all begin pointing in the same direction. When that starts happening, I think it’s worth leaning in and doing the work.
That’s Why We Built Convergence
One of the reasons I’ve enjoyed working with Marc Chaikin over the past year is that we approach the market from two very different directions.
For most of my career, I’ve focused on unusual trading activity. I want to know where something unusual is happening before everybody else notices. Marc has spent decades studying institutional money flow — where the big money is actually going.
As we started comparing notes, we realized something interesting. We were often identifying the same stocks, but for completely different reasons. That eventually became the foundation for our new Convergence system.
Before we ever introduced it publicly, we tested the approach across nearly 200 historical trades. The combined signal produced an 81% win rate, an average gain of roughly 147%, and helped us avoid nearly two out of every three losing trades.
Backtests are one thing, though. What really matters is how a system performs in the real world.
Over the past month, readers have already reported gains of 243%, 505%, 745%, 920%, and even more than 2,000% using the same approach on a Butterfly Network Inc. (BFLY) trade at one of my premium trading services. Of course, not every trade works out that way, and no strategy wins every time. But early results have only reinforced my confidence that Marc and I are onto something worthwhile.
That’s also why I wanted to write this letter… to show you how I think.
The biggest opportunities rarely come with television cameras and front-page headlines. More often, they start quietly, with institutional money beginning to move before the headlines and TV cameras catch up.
That’s the habit I’ve tried to build over the past three decades. It’s also the habit Marc and I are trying to help our readers develop through Convergence.
If you’d like to see exactly how we’re putting that process to work today — not just in biotech, but across AI infrastructure, space, energy, and several other themes we’re watching — I think you’ll enjoy the free presentation Marc and I recently recorded together.
Click here to check it out.
I believe you’ll come away looking at the market a little differently.
Remember, the creative trader wins,
Jonathan Rose
Founder, Masters in Trading
P.S. One of the things I appreciate most about Jonathan’s work is that he almost never starts with, “Here’s the stock to buy.” He starts with, “Here’s what I’m seeing, and here’s why I think it matters.” That’s a much more useful way to learn. If you’d like to see how Jonathan and Wall Street veteran Marc Chaikin are applying that same approach across biotech, AI, SpaceX, and several other market themes, I’d encourage you to take a little time to watch their free presentation.
