After consolidating in the $3 range, the Ichimoku chart for ARNA is showing a possible bullish cross from the Tenkan sen and Kijun sen.
From the chart, we can see that the Tenkan sen is about to cross the Kijun sen.
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Arena Pharmaceuticals (ARNA) : A Review of My Trade
Sep 22, ’09 4:27 PM
On Sept 17, Arena Pharmaceuticals’ management announced that they are going to post the results of the Phase 3 data for its drug on Sept 18 (the following day).
After trading hours, the price shot up to 6.58
However, price in the after trading hours are not really reflective of the actual price. ARNA opens at 4.9 on Sept 18 and it dive down to as low as 4.39
But, the surprised move comes around mid day when a sudden surge of volume push it back 5.20 , 5.30 range. Volume was extremely high that day. It was around 76M vs a 2M (average volume) at around mid-day.
It was hard for me to figure if it is the greatest pump and dump operation or not.
Cos’, on one hand, the lows of 4.39 will have signify that the uptrend was broken. But, yet, within hours, it has rally back as much as 13% to 15% and is back into the ‘uptrend’ range.
With such uncertainty, it is best to just take my profit and watch from the sidelines.
As of Sept 21, ARNA is still trading within the triangle pattern. It is still not clear if the price will break up above the resistance or if it will just break down like Sept 18 upon results.
Thinking out loud.
1. What causes the sudden drop in price on opening when the results is out?
2. What causes the rally hours later? How is the news different compared to just a few ours earlier?
3. I do not have answers to the above? From the chart, I can only say that the opening price breaks all my support level, including the kumo support on the Ichimoku chart as well as the trendline.
I am not taking my chances for now and is standing by the sideline to watch the price action. When it becomes clearer, I may take a position again.
Arena Pharmaceuticals (ARNA) : Follow Up – Ascending Triangle
Sep 17, ’09 3:54 PM
A follow up since my last post on ARNA.
Since the last post, ARNA has reversed.
From a technical point of view, it seems like an ascending triangle is forming. With the flat top at 5.46 from the June high.
Both the kumo and the trendline is suggesting a support at 4.74
It is hard to say whether ARNA will break out on top. But, if it does breakout, I have a target price of $6.60 for it. If it breakdown, a possible target price is 3.90.
