Valeant Pharmaceuticals Int'l. (VRX) could become a case study in business school but in the meantime we need to deal with its rallies and declines in a non-academic setting. What do the charts and indicators look like today? Let's check.
In this daily bar chart of VRX, below, we can see that prices broke down below the cresting 200-day moving average line late last week. The slope of the shorter 550-day moving average line has already turned negative. The daily On-Balance-Volume (OBV) line has declined the past two months telling us that sellers of VRX have been more aggressive with heavier volume being traded on days when VRX has closed lower.
The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside back in December and then crossed the zero line in early February for an outright sell signal. Just looking at the price action and ignoring the indicators it is hard (at least for me) to guess-a-mate where VRX might find buying support.
In this weekly bar chart of VRX, below, we used a log scale to plot the price action because prices moved so much. On this chart we can see that prices closed below the 40-week moving average line. The weekly OBV line shows a peak in December and weakness since. The MACD oscillator is hard to see but it is crossing to the downside but is still above the zero line.
In this Point and Figure chart of VRX, below, we can see a break down at $16.57 and a downside price target of $10.89.
Bottom line: After improving from an April 2017 low, VRX peaked in January and has generated a number of sell signals. VRX is likely to fall further to retest its November low around $11. Keep your powder dry.