Diary of a Financier

Acorda Short Setup

In Capital Markets on Wed 8 Dec 2010 at 15:04
  •  Preparing to short ACOR on technical & fundamental reasoning.
  • Target: $25.

According to technicals, the weekly chart indicates that Acorda Therapeutics (ACOR) has established a trend that’s safe to short.  Therefore, I’m looking for the best entry point for a short position.

ACOR Weekly Chart

For this entry point, I’m following the shorter term daily chart, which also nominates this as a safe zone for short-positions.

ACOR Daily Chart

Once the SStoch & MACD cross their signals, I’ll enter my position to capture this bearish trend with a $25 price target.  Note that the MACD has failed to cross into positive territory in addition.  A look at the extended daily chart shows the price action’s violation of  support around $28.50, which puts us at today’s range, with new first support at $25.

ACOR Daily extended

As my silver lining, the fundamental case is stack against ACOR too. Take a gander at the earnings, both trailing-12 months & forward-12 months.

Upper: Price & PE; Lower: Trailing EPS & Forward EPS

Trailing EPS are climbing out of deep losses, currently at -$1.02 EPS (TTM), which makes the forward expectation of $1.41 FY2011 appear quite desperate.  The balance sheet is tidy by all measures, but Price/Book clocks in at a rich 7.20, and insiders are selling quite furiously.

By week end, I expect to have the confirmation I need to enter my short position in ACOR.

–Romeo

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  1. I’ll have to revisit this one. The MACD cross never ocurred and the stock broke out. We’ll see how momentum picks up, because this could be a tradeable reversal.

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