It's getting cold outside and traders are slowly freezing. At least that's the way it feels when you examine the volume and volatility here. After such a strong run since the election, I imagine a few folks are taking an early holiday. A few may even be taking some profits here, so they can head to the store and buy their kid the G.I. Joe with a kung fu grip. I'm continuing to stockpile my list for after the holidays rather than attack the trading floor. I think it the most prudent activity at the moment.
Perrigo (PRGO) has 2016 in the book as a year to forget. The problem is I don't know if 2017 is going to start off as much of a year to remember. The stock has put in two half-hearted attempts to rally since the huge gap down in the spring. For the buyers left over from 2015, they are praying for a buyout simply to cut losses, but the chances of seeing green are a lottery ticket at this point. Nothing is impossible, but many stubborn traders have been transformed into long-term investors. Every one of those folks is waiting to sell when the stock gets to a price where the loss is "tolerable."
PRGO is stuck in a descending triangle pattern, and a weekly close under $82.50 should trigger another painful leg lower. While we've watched the MACD turn high it hasn't meant much. The large gap lower has given the illusion of some underlying technical strength, but until we see prices trade above the 13-week simple moving average as well as that pattern of lower highs, there is no hurry to scoop up Perrigo.
If I really wanted to bargain hunt in this area, then my attentions would turn to Allergan (AGN) . The stock hasn't shown much either in 2016, but we are seeing a bit of life here with a hammer pattern forming this week. The concern is the basing over the past six weeks is a bear flag. The simple approach is to close any long position should the stock close under $190. For buyers here, that's not a big risk vs. the near-term upside range of $208 to $215. We seem to be setting up for multiple bullish crossovers to match the one currently in place with the StochRSI. The past crossovers, even though they've reversed, have been good for 10% to 20% moves before fading again. That would put a return to $220, possibly even $240, on the plate for 2017. I'd be quite happy taking profits there. This is one of the few I'll dip my toes into in 2016.
