RE:RE:RE:RE:RE:RE:RE:RE:RE:Short-selling and optionskuatolives wrote: Not much for technical analysis but apart from all those options pinned to 6 bucks and the flushing of those 10 million shares, I'm not sure anyone can predict where the sp is headed in the next few days or weeks. If you like the name, buy it. Trying to shave a few cents has as much chance of backfiring as paying off.
Technical analysis, while it may sound like pseudo science, does offer valuable insight to price forecasting. This forecasting has to be flexible simply because there are many components which may not be accounted for via TA which would contribute to price movement.
In the case of ARLZ, we have confirmation that the August run up which caused a near 100% price appreciation was because the street established Yosprala odds of approval were quite high. Now that the drug has been approved, we have been amidst a downtrend closing at lower lows each day and/or near the low of each day.
This does not tell you we are amidst a healthy trend. Or, it doesn't give much incentive to say "Well, tomorrow it's going to stop" because by simply looking at the chart, we saw the higher levels of support which were taken out, and our lower levels which the price moves toward to test are $5.25, $5, etc... When we bounce from a level of support and break the downtrend or downward price channel, we can confirm that the level of support has held itself. Such has not been the case in the past week with ARLZ.
When we are amidst a downtrend, and the price is moving toward those levels of support to test them - why would you be buying unless you have a confirmation we are able to hold and or bounce strongly from those levels of support?
If there is as much as 7% more downside to the price before we retest yet another level of support, why wouldn't you be holding off and buying there? Wouldn't you want ARLZ shares at a 7% discount to today's price? I know I do. Do you think the guys who have shorted this from $6.50 down over a dollar, who will likely be buying when it bottoms, want cheap shares as well? No doubt they do! What's the rush to be buying? You think that the odds of waking up one morning and seeing ARLZ spike 100% and missing a runaway train are higher than the odds of 7% more downside which likely will take a week?
The confirmation to "buy" should come with a confirmation of a bottom being established, a new trend being established, strong momentum, volume, etc. Whereas, the same indicator could be used for a sell signal (with the inverse scenario happening).
Sure, this largely depends on your strategy. "Buy the name" makes sense until it doesn't from a TA perspective. Plenty of people with not much understanding of TA (or fundamentals for that matter) bought the name in Valeant, or Concordia or a plethora of other companies which had ugly pitfalls and the warning signs to head for the exits were clearly shown on the chart. This was even evident with POZN/TRX last year. Most longs here, myself included, could have profitted nicely and waited on the sidelines to rebuy. If profits were reinvested into ARLZ, there would be more in the name, as well.
We had more indications than not (both TA and fundamental) that the show was not going to start until late 2016 and go into 2017 onwards. Holding off on making $ is enough of a backfire. Sitting with $ held in ARLZ for months as the company traded sideways is a backfire. The YTD ARLZ price performance for longs has absolutely sucked. Regardless of how great the company is or will be.
If you have zero problem with this, then none of this is an issue. Otherwise, there is plenty wrong with the "buying the name" hypothesis if the goal is to make lots of $ and exit when your $ is not appreciating in value in a duration of time that is suitable to your goals (especially when you have every ability to move your $ elsewhere into a different name if it means making $ there).
The strongest catalyst ARLZ could present by EOY is M&A. We know Yosprala sales start in October and they aren't gonna be reported until 2016 Q4 financials are released a few months into 2017. How much upside do you really see from the current price?
Even on the day of approval we had a hard time breaking past $6.70 zone. That's just one level of resistance, though, which happens to be 20%+ over the current price. A long road to get there (with other levels of resistance) we'll have to break through before we could see $7+ a share.
We cannot even forecast at this point where the price heads when it goes up because we have yet to bottom. But, being realistic, I imagine at best we do as much as $6.50 - $7.50 range by EOY.
I will be pleasantly surprised otherwise, but I highly doubt it. 2017, 2018, 2019, etc will be the years for ARLZ.