Sep 10, 2010 8:47 AM PDT
It's amazing how history repeats itself. It was only a couple of weeks ago that I warned Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) was likely going to go back and close a gap after a nice (but unsustainable) jump. The clue was the doji-shaped bar we were seeing on the day of the surge. Sure enough, ARNA fell back to close the gap... the very same day. It went on to higher highs, but those who waited got far batter prices than those who didn't.
Care to guess what happened with this small cap today? Big gap, and another doji. So, same story - if you want to jump into the bigger uptrend we're seeing from Arena Pharmaceuticals (which I'm a fan of), now's probably the least optimal time to do it. I see more near-term downside than upside. Have patience.
----------------------------------------------------------------------
Sign-Up for Free to Receive Future Commentary
and Trading Alerts on SOEN, ARNA, and OXGN.
----------------------------------------------------------------------
I hate to be the bearer of bad news for you fans of Solar EnerTech Corp. (OTC:SOEN), but things are about to go from bad to worse. As if being in a persistent downtrend - guided by the combination of 20-day and 50-day averages - isn't frustrating enough, SOEN is actually close to breaking to new multi-year lows, which is where the bears could really start to shred it.
That line in the sand for Solar EnerTech is $0.11, where this small cap stock bottomed in early 2009, and where it has been feeling things out over the last three weeks. With the highs getting progressively lower though, something's got to give soon. I fear it will be the support line that snaps first. 
I mulled this yesterday, but to see this small cap make another nice gain today in the face of a bearish headwind has officially pushed me over the bullish edge with OXiGENE, Inc. (NASDAQ:OXGN). I think it's a technical - and therefore short-term - buy given the current situation.
And what situation is that? OXG is well oversold. That's only half the story though. Not only is it oversold, but the high-volume rally yesterday (after a low-volume sideways period the few days before that) suggests that yesterday was indeed a pivot point. The fact that OXiGENE shares are up today (and back above the 20-day average) just confirms the rebound effort. Just bear in mind it's a trade and not an investment.
If you'd like to receive further updates and any changes in our opinions on OXGN, SOEN, and ARNA, be sure to sign-up for the SCN Newsletter today! It's FREE.
