Technical analysis of Arena Pharmaceuticals price chart:
Weekly chart:
1) downtrendline broken
2) 40 week moving average (= 200 day moving average) has started to go up recently
All this points to potential trend reversal to the upside
Daily chart:
1) last Friday (Sept 18): price increased on huge volume and good news for the company: bullish signal
2) bullish divergence between price and MACD: bullish signal
3) 50 day moving average crossing 200 day moving average to the upside: bullish signal
News:
Arena Pharmaceuticals Inc. (ARNA) reported on September 18 the success of its second large late-stage study of its weight-loss drug Lorcaserin.
From the company website:
Arena is a clinical-stage biopharmaceutical company committed to discovering and developing innovative therapies offering significant medical advances and new options for patients. We are focused on discovering, developing and commercializing oral drugs in four major therapeutic areas: cardiovascular, central nervous system, inflammatory and metabolic diseases. Our lead drug candidate, Lorcaserin Hydrochloride, is intended for the treatment of obesity and is being evaluated in a Phase 3 clinical trial program. Our broad pipeline of novel compounds target G protein-coupled receptors (GPCRs), an important class of validated drug targets, and includes compounds being evaluated independently and with partners, including Merck & Co., Inc. and Ortho-McNeil-Janssen Pharmaceuticals, Inc.
Do I buy? Given the high risk linked to biotech companies, I will initiate a position in the portfolio for $2,500 only and will add more shares for another $2,500 when the price goes above $5.50, which is the resistance above which the stock needs to go to confirm the uptrend.
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