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VRX Valeant Pharmaceuticals Potential Bottoming Trade

VRX was highlighted as a potential long-side trade idea by @qlikely in the trading room. My take on the daily chart is:

  1. A divergent low (positive/bullish divergences in place at the recent low)
  2. Breakout above the white bullish falling wedge pattern
  3. Recent breakout & low-level back-test of the primary (yellow) downtrend line.
VRT daily Feb 15th

VRT daily Feb 15th

15.90 appears to be a mild to moderate resistance level on the VRX 60-minute chart, which the stock is currently flirting with. Watching for an impulsive break & one or two 60-minute closes above that level to help firm up the bullish case. As I'm not seeing impulsive buying (sharp move higher on a marked increase in volume), I'm just passing this along as a potential, unofficial trade idea for now. @qlikely's charts & trading room comments on VRX can be viewed by Gold & free-trial members by clicking here.

VRX 60-minute Feb 15th

VRX 60-minute Feb 15th

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Feb 15, 2017 10:05am|Categories: Equity Market Analysis, Unofficial Long Ideas|Tags: |3 Comments

3 Comments

  1. jrandhawa February 15, 2017 2:59 pm at 2:59 pm

    Randy how is the volume on this one & the volume of the market in current upward push.

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  2. rsotc February 15, 2017 3:14 pm at 3:14 pm

    So far, there has been a marked increase in volume both yesterday (when VRX broke above that most recent downtrend line on the daily chart) and with today’s follow-through move higher. That helps to validate the breakout & decreases the odds that it will fail (vs.an average or below average volume breakout).

    The 90-day avg. volume on VRX is 14.9mm shares. Yesterday it traded 18.8mm shares & so far today it is has already traded over 22.5mm shares with 50 minutes left in the trading session. Keep in mind that volume on most stocks is highest in the morning following the open, tapering off & usually bottoming out around lunch-time (EST) & then increasing into the close. Viewed on a 1-minute chart, volume patterns for a stock often resemble a smile. As such, today’s follow-through move is very much confirmed on an expansion in volume.

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  3. Gonewiththewind February 15, 2017 6:36 pm at 6:36 pm

    A drug got approved by the FDA with black box warning. Can be a coin flip

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