Neuralstem is Quietly Becoming a Monster Trade (CUR)

Nine times out of ten, I'd be hesitant to be bullish on a stock that's already made a 57% run up in just five months. Neuralstem, Inc. (NYSEMKT:CUR) is that one out of ten instances though, where there's plenty more room ahead to keep on running. In fact, I think CUR could almost double in value from where it is now before the rally effort ran out of gas.

For those to familiar, CUR is a biotech stock. Its claim to fame is its stem cell research specifically aimed to treatment nervous system disorders and damage. Neuralstem is the only company with a hippocampus stem cell line, which in simplest terms means its R&D is directly working on creating new neurons. It's an entirely new approach, but one with tremendous promise. And, investors are rightfully encouraged by the fact that the FDA approved this hippocampus stem cell platform's work so far by green lighting the company's ALS trials. That clinical test is now in Phase 2, and continues to hold promise. In fact, it's the enthusiasm regarding Phase 2 testing that jolted the stock back into a bullish mode late last year.

That being said, while the underlying science is fascinating, the call to arms is for traders, based on the way the chart of CUR has taken shape since late last year.

In simplest terms, Neuralstem, Inc. has dropped all the right hints of a bullish reversal, the biggest of which is the fact that it's been rallying well - and finding support in all the right places - since the volatile swing in August of last year. That sharp move lower followed by a sharp move higher (on a volume surge to boot) last August shook off all the weak holders and at the same time attracted a whole new batch of buyers. Some of both groups took action because of the deep and rapid selloff, and others in both groups took action because of the bullish spike. Whatever the reason, it was a proverbial changing of the guard for CUR, switching the environment from a net-bearish one to a net-bullish one.

More telling is the way Neuralstem shares have continued to walk higher, using the 100-day and 200-day moving average lines as a springboard when necessary [both lines were repeated resistance on the way down]. In the same way the selling was relentless between 2010 and 2012, the buying has been relentless since the stock stabilized in October of last year. The before-and-after from the September pivot are almost perfect mirror images of one another.

On that note (mirror images), we can reasonably assume the current rally is going to finish making the mirror image of the 2010-2012 selloff, and carry shares all the way back to the 2010 peak around $3.15. It won't be a perfectly smooth move. But, if there's one thing this CUR does well, it's stay in motion once set into motion.

Bottom line? Let's take the clues at face value, and assume this well-developed uptrend is going to last until further notice... or at least last until the prior high is met again. Just bear in mind it won't get there overnight.

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