Getting Ready for Action in NSPH

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 James Rev Shark has graced me with picking one of my positions as his “Stock of the Week”

 

New Hospital Test for Infection Ready to Explode

Our Stock of the Week is Nanosphere, Inc. (NSPH). NSPH offers a molecular diagnostics platform called the Verigene System that enables genomic and protein testing on a single platform that is used for testing infectious disease assays, human and pharmacogenetic assays, and ultra-sensitive protein assays.

What is of particular interest here is that on June 27 the FDA approved NSPH to market the first nucleic acid test that can identify 12 different bacterial types known to cause bloodstream infections. A study conducted by NSPH showed that their Verigen system was consistent with traditional blood culture methods in 93 percent to 100 percent of the comparisons. However the real value of the NSPH system is that it obtains results in three hours rather than three days.   This article from NBC News provides further details  

The key here is that NSPH is on the verge of a major ramp in its business. As the article linked above notes there is substantial interest in the Verigene System and sales are already increasing.
 
Not only is the story good, but the technical picture is quite promising. The stock popped up last week on the NBC article and has now formed a double-bottom, cup and handle pattern. Volume slowed after the initial excitement of the news and now we are looking for a breakout move as the broader market comes to understand the potential here.
 
As always, we would not chase a gap up open on Monday, but would look to buy either on a low volume pullback toward $3.20 or on a higher volume breakout over $3.50.
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