AMLN setting up?
I haven’t spent much effort on stock movements for a while, but I came across an interesting pattern developing with AMLN that I thought I’d share. This is a 1-year daily chart of AMLN superimposed with the BTK (Amex biotech index). Notice how closely AMLN tracked the BTK until the beginning of May (red arrow). Then it deviated to the downside, presumably related to institutional short-selling and individual fear over concerns that the company might have trouble getting the desired label for exenatide. By mid-June, however, coinciding with the ADA meeting and presentation of data suggesting that exenatide would fulfill its promises, AMLN rebounded to retrace the BTK (first green arrow). The boost was short-lived. For while the BTK continued its 3-month ascent through August, AMLN stagnated. Then came exenatide’s US approval on 8/22 followed 8/23 by the large stock price movement on heavy volume (second green arrow), with the stock again retracing the BTK, making up for the ground it had lost over the summer. The BTK rise slowed appreciably in September and appears to have topped out short-term with retracement back towards its August low (bottom white support line). But AMLN has shown more resiliency so far this month (upper white trend line). Why? Don’t know. Could be optimism over the launch of exenatide. But if so, I think its misguided. In any case, I read this as a setup for a short-term downward trend in AMLN that will parallel BTK’s recent downward movement. Note that I hold AMLN derivatives.
