Maybe but not now

Mar 24th, 2010 – Comment

Currently the stock is trading below the 50 and 200 day moving averages and is currently in a downtrend.


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cangene

 

ANY THOUGHTS ON CANGENE CORP.

THANKS

RANDY

 

Hi Randy,

Cangene Corp. ( CNJ TSX) hasn’t  been on my radar for some time  and your assignment has prompted me to take another look at this player in the hyper-immune therapeutics space.

CNJ

The three year chart provides the view of a stock that has been range bound  between resistance at $6.50 and support at $4.00 since December of 2008. Currently the stock is trading below the 50 and 200 day moving averages and is currently in a downtrend. Generally when a stock is in this posture its not a screaming buy unless you can see a trend reversal to the upside.

 

 

 

cnj3

The six month chart provides a closer look at the recent trading in CNJ which doesn’t suggest a buying opportunity. The MACD signalled the break below $5.00 and the testing of support at $4.50.  If you backtest the MACD is has been a fairly good indicator of buying and selling opportunities.  The RSI indicates that CNJ is oversold which is confirmed by higher than average daily volume as the sellers hit the exit to preserve their capital.

The fast stochastic is signalling a turn but its one lonely indicator and isn’t providing enough evidence at this time to suggest a reversal.

As with all snapshots of a stock you have to keep in mind that things change and no analysis is a guarantee that the future will unfold as described. If you like the business case for CNJ it should be a stock that you have on your watch list and when it starts moving up it could provide the gains you are looking for.

If you decide to invest in CNJ I would suggest that you would need to take a trading approach. The charts demonstrate that for the last three years the stock has been quite volitile and really hasn’t lent itself to a buy and hold strategy.

The next potential entry point would come in at the $4.00 support level. At that level it looks like buyers would be willing to step up to the opportunity given that they have done so in the past. Another thing to keep in mind with CNJ is that its average daily volume over the last three months has been about 31,000 shares so there are liquidity issues that add to the risk profile.

 

MAKE IT A HUGE SPRING AND HAPPY CAPITALISM!

Categories: Pharmaceuticals
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