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Timing's everything right? It's hard to predict when this will unfold, but if this pattern synchronizes with what we are waiting for newswise, I'd say that we should see a volume surge and/or breakout within the next 20 trading days. If not, then we could have a "Hound of the Baskervilles" type situation.... (ie something is wrong behind the scenes).
Marzan - A short position is a short position, whether the intent is to hedge or speculate on falling prices. The point of interest at this stage of development is the fact that these AMRN short positions can suffer infinite loses on rising prices/demand. Keep in mind, once a squeeze ignites, the bullish price action can set off a series of other price/volume surges, one helping to cause the next, enabling the price to slice up through key moving averages and or once broken support levels - now acting as resistance. For example I watch for:
• Price break above the 50-day EMA. • Moving average crossovers. • MACD centerline crossover. • Golden Cross (50MA up through the 200MA)
Many program traders have algorithms pegged to these events in their formulation. So when trading this pattern, these sequential events can slingshot share prices up in hurry. Hope that helps :)
One of the most under appreciated aspects of AMRN's current setup is the fact that much of that accumulation (buying) has been absorbed by shorting; 11% of the AMRN float is short. In comparison, CPXX’s short interest was only 2.9% (pre-breakout). These short sellers are nervous now as the demand line slopes up and volume diminishes. No doubt there are MANY stop buy orders just above the down trendline (supply line). If the AMRN shorts suddenly decided to cover, it would take them 26 days to cover at the current average volume (Short interest ratio = 26). That is a very narrow exit! That is why this squeeze pattern can be so explosive. Yes, absolutely (Mog and Mik), we will see a similar squeeze for AMRN. A little spark and this thing can easily rival what we saw with CPXX which only had a 2.45 days to cover ratio compared to AMRN’s 26! Mog wants you to think a CPXX similar squeeze couldn’t happen because its market cap dependent – LOL. His objective is to put a sliver of doubt in the back of your mind so that when fairly good (not great) news is announced, his boss can dump the bid, frighten you out of your shares, then run it up without you. Cleaver deceit how he is front running for them. Trading this stock involves gaming probabilities. When all variables are thrown into the equation, it converts to a Win big in 2016 or win big in 2018 for the bulls who are long AMRN. For the bears who are short, it is a 90% chance of losing and a 75% chance of losing BIG, complements of a high short interest ratio induced squeeze.
It is misguided logic for Mog to assume a secondary offering will tank the stock. When and if a dilutive secondary is announced, the pps will be much higher, scripts will be higher, the future will be clearer, and buy-side momentum/volume will be alive and well. The street would likely perceive it as a positive step towards building future revenue and thus continue to accumulate in earnest - resulting in price behavior more representative of the company’s bright future.
The only hope for AMRN shorts is a halt for futility or an insignificant difference in efficacy for the R-IT trial. Absent of either of those outcomes and they remain locked up in the ‘house of pain.’ Ouch :)
Technical analysis, when used correctly, can serve to mirror fundamental strength. Granted, AMRN has poor fundamental parameters with regards to earnings, price to sales, etc., but the potential to elevate every metric is huge. The current price pattern mirrors this. As you know, stock price performance does not always reflect strong fundamentals. To trade based solely on fundamental analysis can be dangerous, yielding inconsistent success. Price is king, and technical analysis that uncovers stocks heralding higher prices is always preferred. Trading such stocks like AMRN —that also have high fundamental potential— further ensures that the wind is at our back.
Symmetrical Triangle patterns breakout when the pps is 1/2 to 2/3 near the apex. AMRN is currently sitting at the 2/3 position and is trending synchronous (in terms of timing) with the looming PR. I see 2 scenarios unfolding. It progresses up towards the down trendline over the next 4-6 weeks with increasing volume as resistance is approached and then we wake up to news and a big high volume gap up. The volume (as you pointed out) is the key for this to ensue. The volume (pre-breakout) will indicate the probability of breakout or pullback. If volume is light in the absence of a PR, the stock will likely pull back and retest 1.24. 'Big Money' will use this opportunity to shake out weak hands before running it up to the moon. Often with this pattern, the first break is the fake break (as you noted). If longs feel they can't sleep at night without an active stop-loss, they must factor in this shakeout or they will get whipsawed out of their shares and wake up to the opportunity COST of their lifetime. Bottom line, the company is poised to unleash the fundamental strength and power of their business (which at the end of the day is about revenue/earnings/profit). It just so happens to coincide with a unique, powerful price pattern - full of gunpowder, short-sellers and a fuse that is LIT!
Somewhat so yes. Price action is tracing higher lows and lower highs, while daily ranges increasingly shorten. True this is being impacted by the binary event, but as we converge further into the apex, it won't take much to ignite a move that breaks the down trendline. If so, look out above. On the other hand it would take some devastating news to force a downside breakout (sorry Mog, dilution is priced in). I think FishyFingers' map is right, although I doubt we see a run up to 10 pre-DMC decision. The good news is that the pps will likely be significantly higher when we receive news of a halt or not. Good interim results and no halt will certainly force a pullback, but in my opinion it will be limited by the technical levels of support under the price at that time + the residual short position that still needs to cover + institutions looking to build bullish positions on the heels of strong momentum/volume and clarity moving forward. I think the all or none proposition applies only to the AMRN Bears who have a 70% chance of getting whacked. One word of advice for them.....JAZZ
Price breakout near? As a long time lurker, I appreciate all the shared insights regarding the prospects for V/AMRN. I know many of you don’t give a hoot about technical analysis but I firmly believe that most of the time the technical posture of a stock also represents its fundamental footing. Certain price patterns can also show an element of predictability in terms of fundamental potential. Consider this: From the .78 low on 11/11/14 to the subsequent high of 3.33 on 3/16/15, those two extremes marked the beginning of a large symmetrical triangle formation (on a daily chart). From then, prices have oscillated within the converging trendlines on decreasing volume, currently resting near the apex. This is a ‘perfect storm’ folks. As big as the binary event is, this massive technical squeeze is of equal magnitude. The probabilities (in my opinion) of an upside resolution to this Classical Chart pattern strongly favor the bulls and thus coincide with the halt scenario. Those short the stock (large short ratio of 26) cannot cover easily due to this characteristic low volume/volatility and are in essence cornered for the slaughter. Once their stops are triggered, this will blow to the upside quickly on massive volume (think of a zit popping). This base/pattern has been building for a long time and once it breaks, it will sustain a long term short-squeeze-induced bull run. Don’t kid yourself; the pros (hedge funds) are aware of this setup. They will first try to manipulate the price lower to ‘run the stops,’ then run it up to squeeze the huge short interest. I will be watching the option activity (above and below the apex) for clues to the anticipated news event that lights this fuse. In no way shape or form is this stock broken. The low price, sleepy moves, and low volume appear deceptively as weakness, but in reality indicate a coiled spring. Has this sort of pattern ever happened before? Yes, in a similar fashion, from March to the middle of June 2012 (prior to FDA acceptance) prices oscillated into the apex of an ascending triangle that broke sharply to the upside. It was equally predictable as this setup. By the way, lest I forget, the price objective for this symmetrical triangle calls for a price rise to 5.88. If sideline bargain buyers jump in, it could go much higher in the short term. While the rest of you continue to connect dots, I will do the same– only technically - :) FFS