Monday, September 13, 2010

ENDP Watch

Endo Pharmaceuticals Holdings Inc. (ENDP), a drug company specializing in pain control, is showng bull phase on the fast stochastic, suggesting that the stock might be ready to resume the rise that carried it up 50% beginning in May. On the chart, the price appears to be near to completing a pennant, a continuation pattern suggesting a rise of more than 3 points, or 10% from the present level.
ENDP $28.72

Pennants, like most chart pattern plays, are Tinkerbell indicators. If you just wish hard enough -- and if enough traders buy into the belief -- then the pattern performs as expected. The problem comes when everyone sees what's about to happen, and bails out early before the pattern has completed its performance. So I approach these with a deep suspicion.

Having said that, ENDP is in its own right a wonderful stock for perennial bull plays. The fundamentals are excellent and the trend is up.

Other the other hand, it is a pharmaceutical company, and such beasts are far more prone to news and policy surprises than are companies in other sectors.

The fast stochastic move is technically a negation of a bear signal. The indicator slipped below the 80-line on Aug. 24, dipped down 27 on Aug. 31, and then reversed, crossing back above the 80 line in today's trading. Altogether, seven false bear signals appear on the three-month chart, which I take to be a bullish sign.

On the Person's chart, Person's Proprietary Signal moved to bull phase on Sept. 3, untypically leading the fast stochastic. The stock is trading near the upper weekly pivot and remains within the range that has held throughout September.

Person's Table
ppspps openupper pivotlower pivot
ENDP $28.72 $28.32 sep3 $28.79 +0.2% $28.11 -2.1%

The price is just above the 20-day moving average, although it has not yet dipped in to the neutral zone, 1% above or below the average itself.

Reversal Levels
  • $29.61, +3.1% (swing high)
  • $28.72 <== You are here.
  • $28.33, -1.4% (20-day ma)
  • $27.06, -5.8%
Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • pps - Person's Proprietary Signal.
  • psar - Parabolic Stop and Reverse
  • ma20 - 20-day moving average
  • ma200 - 200-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways.
  • sto: green for bull, red for bear.
  • sto zone: green for overbought (80+), red for oversold (20-), yellow for neutral zone
  • psar, pps, macd: green for bull mode, red for bear.
  • macd trend: green for rising, yellow for sideways, red for falling.
  • neutral.
  • ma20, ma200: green for above the average by more than 1%, red for below the average by more than 1%, yellow for within 1% either side of the average.

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