Rigel Pharmaceuticals (RIGL)

Company

RIGL 1-year chart RIGL 1-year chart

"Rigel is a clinical-stage drug development company that discovers and develops novel, small-molecule drugs for the treatment of inflammatory diseases and cancer, as well as viral and metabolic diseases." (company website)

RIGL 6-month chart
RIGL 6-month chart

Sell short

Earlier in the year, I made some money by selling RIGL short, just before it started a new up-cycle, eventually leading to a new 52-week high. Since then, however, it has been on a clear downtrend, helped along by the issuance of 5 million new shares at a much lower price $9.75. I decided it was time to short RIGL again, since it was trading near the trend line with no signs of reversing direction. Yesterday evening, after reviewing the chart and the MarketEdge analysis, I put in an order to sell short near what I expected to be today's open/high. But— before the market opened today, Credit Suisse started RIGL at "outperform" and the price shot up about 5%, leaving me deeply in the hole as the session got underway. Argh! Now I can only hope that the spurt was only fleeting enthusiasm and folks will look soberly at the chart.

  • Price momentum (PPO) — trending down and believed to be at end of an upcycle
  • Relative strength (RSI) — had improved to neutral
  • Trend (ADX) — trending down, with buying pressure (+DI) about equal to selling pressure (-DI) as result of up-cycle
  • Volume — fairly constant with more down-days than up-days

Based on technical analysis, MarketEdge calls RIGL a "short candidate" in a "strong downward trend," noting that it is "overbought" and at a "good entry point."

Buy to cover

gain Bottom line
7%

I decided to take profits while they were available. RIGL is still trading well below the trend-line, but yesterday's deep dive and subsequent recovery (with today's higher open) makes me suspect that another up-cycle may have just started. If so, I'll be happy to catch the elevator on its next trip down, likely to be triggered by earnings next week.