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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: wizzards wine who wrote (21937)	6/27/1999 4:15:00 PM
From: Casaubon	Read Replies (1) \| Respond to of 34812

I happened to notice your message regarding potential shorts. I have have a few words to say regarding one of them. As per the rules of P&F investing VRTX is indeed a short candidate, however, I have been studying some other TA techniques (in particular candlesticks and trend analysis) and have made the following observations: VRTX after an extended downtrend, with very well defined trend lines, switched to a basing pattern initiated by hammer line about the third week of april. The hammer signalled a switch in trend, from down to flat, until early june (revealing a pattern know as the "three river bottom"). At this point a rally ensued, from another hammer-like candlestick called a spring, which was in fact a bullish counter-attack line on high volume. The ensuing rally ran into resistance exactly at the expected resistance level of 24 1/2, but I would like to point out some TA to be aware of should you desire to short the stock. In my opinion, the "spring" signalled another change in trend from flat to up and prices are now finding support on a new bullish support line emmanating from the base of the "spring". If this new bullish support line holds, then price declines should be contained to about the $22 1/2 level. However it should also be noted that, should a "spring" fail, it is common for prices to trend back to the base of the channel where the "spring" initiated. Thus, I expect a maximum downside of $19 1/2, (ie. the base of the flat channel). On the FA side of things, VRTX has a tremendous pipeline (mostly in phase two clinicals) and a new revenue source from thier new product launch (amprenavir, APV), which after several months of sales has already captured about 10% of new presriptions written for protease inhibitors. Now, admittedly, APV will not be providing a tremendous source of income to VRTX, however, it should provide support to a strong balance sheet, buoyed by a large amount of cash to fund thier research. Admittedly, another product will be required to rocket this stock but they have a strong arsenal of potentials. Data from numerous clinical trials should be forthcoming later this year. I have been a long-term holder of VRTX stock, and have not made money from this stock. This is what prompted me to initiate my study of technical analysis. In fact, you might say I have made a case study of VRTX. From my studies, I have grown somewhat bearish of the intermediate term market (6-12 monthes). As a result, I have sold half my position in VRTX and replaced it with an equivalent number of calls, purchased during the low volatility basing pattern. This has provided an effective bullish hedge, allowing me to capture any move to the upside, while minimizing my risk exposure. In fact, I might look to write some covered calls very soon, to protect myself, thereby creating a spread. However, I would not "risk" my capital betting against VRTX, JMO. Good luck to all here!