Idenix Pharmaceuticals (IDIX)

Company

Idenix Pharmaceuticals, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of drugs for the treatment of human viral and other infectious diseases in the United States and Europe. It primarily focuses on diseases caused by hepatitis B virus (HBV), hepatitis C virus (HCV), and human immunodeficiency virus (HIV). (company website)

IDIX 6-month chart
IDIX 6-month chart

Sell short

IDIX 1-year chart IDIX 1-year chart

Idenix has been trending down for most of the last year, and the decline has steepened in the last three months. When IDIX released earnings in April, they surprised the market with a narrower-then-expected loss. I don't think it was enough to reverse the downtrend.

  • Price momentum (PPO) — picked up since earnings slightly, but appears to be leveling off
  • Relative strength (RSI) — declining, and weakening again after a brief surge after earnings
  • Trend (ADX) — selling pressure (-DI) is above buying pressure (+DI) and rising
  • Volume — sell-offs account for most of the above-normal volume days

Based on technical analysis, MarketEdge calls IDIX a "short candidate" in a "strong downward trend."

Buy to cover

loss Bottom line
-0%

After reaching a new 52-week low IDIX began to pick up strength (RSI) and momentum (PPO), so I covered my short in IDIX this morning. Since I covered at the same price as I had bought, I suffered only the loss of my trading expenses.

It's true that IDIX stopped short of crossing above the 50-day moving average, but it did break above (and stay above) the short-term trend line. It could well be that this test of the average will be followed by more downward movement, but — especially with pharmaceutical stocks — you can never tell: there is always a great risk of a sudden price movement, up or down, resulting from news. And, IDIX is presenting at a conference next week—