3SOF

Quote from: Melf Elf on September 09, 2006, 06:56:09 AM
This positioning is what's referred to as "ready to turn the corner above the Kumo (Cloud), and poised to go higher."  The technical chart work is done (breakout and successful re-test), so it's "good to go."

Miserable failure, if it doesn't. 

ARNA gapped up to 11.70 at the open and made a new high for the move, at 12.43, on news that they are launching Phase III obesity trials for Lorcaserin.

Unfornately, all of the gains have been given back, and ARNA has gone red. 

That's fine if it's a gap filler, and if ARNA moves higher for the remainder of the day.  But, in case it's a  "miserable failure," I'm raising my stop to 11.09, below the recent 11.10 lows, to defend my profits from the August 28 "buy pivot," at 10.69.

Quote from: Melf Elf on September 12, 2006, 11:11:32 AM
I'm raising my stop to 11.09, below the recent 11.10 lows, to defend my profits from the August 28 "buy pivot," at 10.69.

Stopped out at 11.09.  Gain: 3.6%.

The up trendline off the 9.18 low came in yesterday at 11.09.  The low was 11.07.

The neckline came in at 11.175.  The close was 11.15, slightly below it.

I've liked this chart so well, I was sorely tempted to hold it for a CLOSE below the up trendline, but I don't like the fact that I had a paper gain of 16% on the Phase III trials that has all but evaporated.  I don't like it when gains like that get reversed, and when the stock acts sloppy at support levels, like ARNA did yesterday (violated the up trendline...closed back below the neckline). 

I probably got faked out, but I don't want to turn the 16% gain into a loss.  I took the 3.6%.

Quote from: Melf Elf on September 15, 2006, 07:22:13 AM
I probably got faked out

And, how!   

I'm getting punished for respecting the TWO intraday breaks of support, and selling, but sometimes the market just ain't fair.

Curses!   

Time to get in again?

Quote from: Se7en on September 20, 2006, 06:06:47 PM
Time to get in again?
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Se7en,

Man, oh man, did I get gotten on my ARNA trade!   

Another breakout (Rectangle) yesterday, as you show on your chart.  Applause.  That pattern breakout puts 13.70 IN PLAY, reinforcing the 13.66 target iN PLAY already from the  August 29 breakout.

The problem with entering here is that we're at 12.90, so if the targets get MADE (and, they certainly should, but ya never know), that's only a gain of 6%.

The risk back to the 12.40 - 12.43 breakout is about 4%.  The risk, using the last low of 11.81 as the "logical stop," is 8.4%, which greater than the anticipated gain of 6%.

It could go higher than the 13.66 - 13.70 targets IN PLAY, of course, but I haven't got any targets indicating that, so with the risk:reward as unfavorable as it is, I have to pass.

Good luck if you play it. 

Quote from: Se7en on September 20, 2006, 06:06:47 PM
Time to get in again?

Se7en,

This morning's re-test of the 12.40 - 12.43 breakout is a much more favorable entry.

Using a stop below the last low (11.82), prior to the breakout, the risk is a loss of about 5%.  If the 13.66 and 13.70 targets get MADE, the gain is about 10%, for a 1:2 risk reward. 

That ratio isn't great, but it's okay, and it's buying a re-test of a breakout in a stock that has a DOUBLE upside target in the same price area (13.66 - 13.70).

I was too late this morning to buy at the 12.40 area but I bought just now at 12.40, still a bit to early as it dipped further after I bought! Well, let's hope for a turnaround!

Quote from: Se7en on September 21, 2006, 01:20:13 PM
I was too late this morning to buy at the 12.40 area but I bought just now at 12.40, still a bit to early as it dipped further after I bought! Well, let's hope for a turnaround!

Se7en,

12.40 is much better entry that yesterday's 12.90 close on a risk:reward basis, and because of the re-test there, and the targets IN PLAY.  If you're stopped out, at least you structured the trade so that "The Force was with you."  Good luck!

You're absolutely right, I suppose a close of 12.40 would be 'not bad' for today.

Quote from: Se7en on September 21, 2006, 03:06:35 PM
You're absolutely right, I suppose a close of 12.40 would be 'not bad' for today.

Se7en,

Right.  After that sloppiness down to the 12.26 low today, the 12.53 close looks like the stock is at least making an effort to be sincere about holding the 12.40 - 12.43 Rectangle breakout.   

Is that sloppiness down to the 12.26 low today from any technical or other value even if it closed nicely above the 12.40 - 12.43 Rectangle breakout? I mean was it 'better' that the 12.40 would have held instead of be broken through during a large part of the day? Can we draw a conclusion out  of that or doesn't it matter because the close was good? Tia.

Quote from: Se7en on September 21, 2006, 04:59:51 PM
Is that sloppiness down to the 12.26 low today from any technical or other value even if it closed nicely above the 12.40 - 12.43 Rectangle breakout?

Se7en,

It wasn't for any reason that I could discern, like to tag the 9EMA, or the 20DMA, but I could be missing something.

 

Quote
I mean was it 'better' that the 12.40 would have held instead of be broken through during a large part of the day?

It would have been much better if 12.40 support held all day, because then we would be having these concerns, and wondering what the heck it was doing trading so long below support.



12.40 - 12.43 was resistance until the breakout.  "Former resistance should act as SUPPORT on a re-test."  It did, initially.  ARNA went straight down from the opening bell, then bounced off 12.40 exactly.   That was very nice action.  The break of 12.40 afterwards was sloppy and a flaw, technically.

Quote
Can we draw a conclusion out  of that or doesn't it matter because the close was good? Tia.

We can try to understand what's going on, by observation.  For example:

1. ARNA did bounce off 12.40 in the early going, confirming, "Yes, former resistance is support."

2. We can observe that 12.40 support got broken later on, and attribute that to the fact that the general market also got whacked.  That gives us "a reason," but in the end, we really don't want any excuses for sloppy behavior.  GET THE JOB DONE!

3. ARNA did close above 12.40, so it did "get the job done!" 

When ARNA didn't get the job done on September 14, by breaking a validated trendline and by closing below the Bullish Inverse H&S breakout, I sold it.

"Be patient with your winners...be ruthless with your losers."

I tend to be too ruthless with losers, and not patient enough with winners.  One of my many flaws.

 

But, as you'll see in the next post, this bottom in ARNA isn't very strong, and I wasn't willing to sit for TWO technical errors on September 14.  It turns out that I got faked out.  BADLY.  Very annoying, but, that's fine.  I'd rather be safe than sorry, and felt that I needed to honor the stop.

We'll look at the bigger picture in the next post.

Se7en,

Bigger picture, ARNA completed a 4-month H&S Top in April.  Notice that after the neckline broke, the stock tagged its 200DMA, then rallied back above the neckline.

That neckline was former support, so it "should have" acted as resistance on the rally off the 200DMA.  Initially, it didn't.  ARNA rallied above the neckline and also closed above the neckline, giving the shorts a sleepless night.

The high of the Right Shoulder, 15.55, never was taken out, though.  The high of the move off the 200 DMA was 15.44, so the shorts were alright.

Whew! (we need a face on the toolbar that sweats profusely). 

Notice that on the second attempt to get back through the neckline, on June 2, the neckline and the declining 50DMA were rock solid resistance, as they should have been. 

That kind of failure is "the Perfect Short" (if there is such a thing)   

Failure at DOUBLE resistance, in this case, and no problem on the short trade whatsoever.  The stock pretty much heads straight down.

Now let's look at the current time-frame.  The Bullish Inverse H&S pattern (blue) isn't nearly as big as The Bearish H&S Top, so The Bears have more players, and they have the advantange.

But, as I posted a month ago, I liked the trendline validation, the possible breakout (which we got), and the fact that the 13.66 target IN PLAY on the breakout is well below the neckline of the H&S Top.  That's up at 14.50.  The 200 DMA also is above the target.  It's at 13.83.

The fact that ARNA has built another bullish base (the Rectangle) and broken out of it (12.40 - 12.43) is a positive.  That gives the chart some more Bulls to go up against the 4 months worth of Bears sitting above that 14.50 neckline, and again, ARNA doesn't even have to get up there to make the 13.66 - 13.70 targets that are IN PLAY.

Still...we don't want a lot of nonsense about this breakout.  GET THE JOB DONE. 

Good luck, Se7en!

Thx for all the explaining Melf Elf!
Looks like my trade didn't start well, 11.85 is the low of the day so far!

This sucks!!!

Do you also have a 'worst case exit strategy'? Sell at the open or wait or ...?


Arena says Merck ends atherosclerosis development
Mon Sep 25, 2006 4:26pm ET138

LOS ANGELES, Sept 25 (Reuters) - Arena Pharmaceuticals, Inc. (ARNA.O: Quote, Profile, Research) said on Monday that Merck & Co. Inc. (MRK.N: Quote, Profile, Research) has pulled out of a partnership to develop an experimental drug for atherosclerosis after results from a mid-stage clinical trail.

Arena said the compound, called MK-0354, is still being studied for treatment of other disorders.

The company also said additional experimental drugs for the treatment of atherosclerosis and related disorders will continue under the partnership.

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060925:MTFH97272_2006-09-25_20-23-53_WEN5906&type=comktNews&rpc=44