Sun pharma…
Not convinced to call it a bottom yet…
The US regulator has upgraded current status of Halol plant to Voluntary Action Indicated. The status of the plant means that the works of company are at satisfactory level of USFDA and issues in the company might have virtually resolved.The VAI status opens the opportunity of
receiving new approvals for US markets .While many approvals are expected in near term, most of those ANDAs will be irrelevant as older molecules are crowded with strong competition already , add on the price erosion. Most likely, it will not pursue majority of the molecules as management to pursue only ‘profitable growth’ as it was observed in the case of withdrawal of co‐pay arrangement of Absorica in US…
the 5 waves were completed in the lifetime charts of the stock and then the company received warning letter and reduced the plant status to OAI (Official Action Indicated) in December CY15 after the FDA visit in October CY15, shortly after the correction started in the stock from mid 2015…
the company received Form‐483 with multiple observations during the last two years
Now in the technical terms, the 61.8% level was tested twice n the weekly chart and on the second test the rsi started diverging…Along with it, the MACD merged with the signal for an apparently impending cross over…
the setup looks to have bottomed out …
But on a closer look in the weekly chart, this comes up
while there was a huge volume stopping action at the preliminary support[ps], followed by a upmove to fill the gap of the gap down bar forming the PS , and then the selling climax [sclx] on lower volume than ps and a automatic reaction[ar] following it stopped out at the 200week wilder moving average [darkest blue line] forming a horn bar…
what followed is atypical in a wyckoff accumualtion schematics… 2 upthrust [ut] both stopped out at the 200week winder moving average again… both times at high volumes…
this is a bearish picture
happening in phase b of the schematics[cause building phase]… prompts me to think this might be wyckoff redistribution and a B wave of the ABC correction that we are in since the last 3 years…
phase C would be interesting, i would be looking out if there is a spring formation or not… if so this might show foot prints of accumulation rather, but in my present line of thinkning i would expect a upthrust after distribution[utad] in phase c followed by a preliminary supply[psy] in phase d and then a phase e mark down…
nevertheless, there has been no show of weakness till now, which is also a feature of redistribution… then again, upthrust are rather a part of distributon, redistribution and less commonly reaccumualtion schematics, where the bullish momentum is high and the composite operators induce a stopping action vigorously to stop out the momentum traders to keep the prices low and continue accumulating , its almost never a feature of accumulation which happens at the bottom of a correction, as no momentum in the price action exists at such depth…
mean while, i hear noises from the media community very frequently presenting a bullish case for sun pharma ,often in excess… these are fearful indicators to me, which makes me think this might be truly a retail bull trap classic redistribution…
still, watching the price action under scope, phase c will tell where this schematics is leading to, a true bottom or a trap…
Disclaimer…not invested, tracking the fundamentals closely…
opinion expressed are my own interpretation based on conviction…