The 3 month chart for RGEN shows a double top formation setting up a near term loss below the previous support of 8.37
At the time of the first top of 9.12, Bollinger bands were at 8.85 and 5.43 Average at 7.18. +18 DMI was 47. The oscillator was 80. Momentum was 150. The smooth MACD was .2 Volumes were in the .9M range.
This means that the first top had plently of push under it with nothing holding it back.
The second top was slightly lower at 9.09 Bollinger bands were 9.75 and 6.51 Average at 8.13. +18 DMI was 34. The oscillator was 63. Momentum was 110. The smooth MACD was .0 Volumes were in the .3M range.
This means that the second top had less volume, momentum and it had a significant trend line pushing down on it that was created with highs from Nov and Jan.
The previous support of 8.37 didn't reach the previous average of 7.18. But now the average is at 8.26 and rising. By the time the second test of support happens it will naturally dip below the average. This breaks support and allows the price to drop significantly below the previous support.
The fundamentals also support a drop now. The company will announce Q1 results on May 2. Almost all revenues from royalties will be lost this year when the Orencia agreement expires. The EPS raised from $0.45 in 2012 to $0.61 in 2013. But they are projected to decline sharply in 2014 to just $0.35. This is because Orencia was providing $0.43 per share in 2013 which will be $0.00 per share in 2014.
$0.61 minus $0.43 = $0.18 This means that they will have to do something else to raise the additional $0.17 to get them to the sharp projected loss of $0.35.
Basically, they are done with drug development so everything has to be based on earnings. The current value is $7-$8.35. Long term prospects for RGEN may be good but the short term ugliness beginning in 2014 should prove to be brutal for the short term stock price.
If you wait a bit, you should be able to easily pick this stock up in the $3.50-$4.50 range.
That's funny... I read the same chart, and I see a possible short term pullback to the $8.60 - $8.70 range, before a climb to the $10.50 range in the next 30 to 60 days.
Sentiment: Strong Buy
It already hit 8.68 today. So that's really short term.
The previous support of 8.37 that it bounced off of was the simple moving average at 8.37. Even if you are right and it goes down to 8.60 or 8.70, this still puts it below the current simple moving average which is rising. It also puts it below the middle Bollinger band, the weighted moving average, and the exponential moving average.
The catalyst for this stock could happen in just a few days (May 2) to coincide with the second testing of support. ...all while the moving averages climb higher. If you look at this stocks history, you will see a pattern of this stock dropping straight down. In fact, every single time this stock has climbed to these levels it has crashed down in a straight line to the $4 levels. Only once did it only crash to the $5 level from above 16.60 and then eventually came down to $4 and a year later it was below $1.50.
We may not see it drop straight down this time,(although, we may) but we will see it test support and with the double top pattern and possible catalyst, I believe we will see that support fail.
Obviously you are short the stock but you have no idea about the business because they have recently changed their business model to bioprocessing which accounts for most of their revenues already. Might need to do a little more research and rely less on technicals which just follow price and volume. Indicators are always lagging.
I am short the stock short term. I am long the stock long term. I think that you will see this stock go to +$15 possibly in 2014 or 2015. ...but this stock will hit $5 again before that. I do know about the changes to the business model. With these changes the short term EPS goes from $0.61 to $0.35. (possibly lower) The stock price will follow.
I said it should test support around May 2nd. When I wrote my post it was just making the second top. (If you check the chart, you will clearly see this.) It should slowly come down (with a few spikes up) today and next week until it tests support around May 2nd.
"If you wait a bit, you should be able to easily pick this stock up in the $3.50-$4.50 range."
I have no idea where mr market will eventually value RGEN but the above prediction is about the most ridiculous I have ever heard.
First, at the end of this year year, RGEN will have over $2 a share in cash with absolutely no debt. So, in reality, RGEN would be selling for $1.50-$2.50 according to the above forecast.
Second, RGEN is far from finished with drug development.. RGEN may be receiving royalties from its drug prospects for many years. These royalities would not only dwarf what RGEN has received from Orenccia but would swell RGEN's already overflowing bank account to astronomical levels.
Just for good measure, throw in in a exploding bioprocessing sector where RGEN is first in class.
As per my analysis on April 24th, the stock price did dip today below the average. It dipped below the simple moving average that it bounced off of before on the first dip, the weighted moving average, the exponential moving average and the middle Bollinger band, the lowest of which was $7.71.
The price will either bounce off the average again and head up to $2.00 higher with good news tomorrow. Or with any bad news the support will fail and the stock will head lower fast.