Special SItuation Trade: SGYP LONG Trade for Daily Bullish Bat + Weekly Seed Wave + Monthly Mini Pup

17 May Special SItuation Trade: SGYP LONG Trade for Daily Bullish Bat + Weekly Seed Wave + Monthly Mini Pup

Posted at 21:26h in Blog, Performance by AVP
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SGYPweeklyseedwave05182015  SGYPbullishbat05172015SGYP05182015rifleswing

SGYP (Synergy Phamaceuticals)  hit my radar post market on Friday, May 15th, 2015.  It spiked hard post market on news of the Paulson stake filing on the 13-F of 3.1 million shares.  Upon further research, this stock appeared to be very interesting both fundamentally and technically.  SGYP has a safety & efficacy phase 3 top line results due out any day and there is speculation it will be unveiled at the UBS healthcare conference at noon this Wednesday, May 20th, 2015, when the CEO will present a corporate update.  It seems the strategy for this company is to produce, patent and get acquired.  Valeant recently purchase Salix for $11 billion.  That opened up interest in the whole GI sector.  Competitor IRWD has a $2 billion market cap.  SGYP placanatide p2 had solid results with 1350 patients and nearing completion on p3 as mentioned.  They are also in p3 on sp-33, another novel treatment for CIC.  Canter upgraded to BUY with a $8-$11 target on May 12th. Company has $196 mil cash which should be plenty to last through the completion of sp-33 p3 projected for early 2016.  There is much speculation on an acquisition prior to completion. That's my rudimentary fundamentals.

The technical analysis is my specialty.   On the daily, I spotted a very solid BULLISH BAT pattern which sets up on a trigger above 4.12 (above the .618) which then triggers the upside measured targets at the 1.27-1.618 rage which are $4.84-$5.24. 

The monthly has a pretzel mini pup that formed in March.  This was likely when Paulson/Orbimed was accumulating more shares.  The monthly mini pup has two targets set at 4.72 and 6.60 which are the 50 period moving average and upper bollinger bands with support at 3.70-3.50 on the 15 and 5 period ma.

The weekly chart show two higher market structure lows.  The second market structure low formed around the monthly 5 period ma at 3.50 which further confirms the monthly mini pup.  When two subsequent higher market structure lows form, that sets up a bullish seed wave.  The trigger to detonate this weekly seed wave about be above the 4.70 area (1 tick above the recent 4.69 high).  However, we also have that monthly 50 period ma target at 4.72.  Therefore, we can safely say that a $4.76 break would detonate the weekly bullish seed wave which sets up measured targets to the 1.27-1.618 targets which are $5.28-$6.06.  These targets hit 80-90% of the times when supported by a mini pup or perfect storm and the monthly has a pretzel mini pup.

This is a very compelling set-up which convinced me to take the LONG SGYP around $4.09 avg.  

Chart Technicals:

  • 1) Daily bullish Bat pattern forming
    1. Targets 4.84, 5.00 and 5.24   (1.27, 1.414 and 1.618 of CD leg)
  • 2) Weekly Seed Wave trigger above 4.70 sets up targets at 5.28, 5.60 and 6.06
  • 3) 60/15/5 min perfect storm + 5 min bullish seed wave
  • 4) Monthly mini pup with 4.70

Fundamental Catalysts:

  • 1) Two drugs (placanatide sp-304 and sp-33) in Phase 3 trials, Top line results for placenatide s&e phase 3 expected shortly.
  • 2) One in Phase 2
  1. http://whalewisdom.com/schedule13d/view/orbimed-advisors-llc-sc-13g-2015-03-09-sgyp
  2. 14.8 million shares owned by Orbimed Advisors, LLC as of march 31st