InterMune Inc (NASDAQ: ITMN)

InterMune, Inc. focuses on the research, development, and commercialization of therapies for pulmonology and orphan fibrotic diseases in North America and Europe. The company develops therapies for the treatment of idiopathic pulmonary fibrosis (IPF), a progressive, irreversible, and fatal lung disease. It markets and sells pirfenidone, an orally active, anti-fibrotic agent that inhibits the synthesis of TGF-beta and TNF-alpha under the Esbriet name for the treatment of adults with mild to moderate IPF in the European Union and Canada. The company’s pirfenidone has also completed three Phase III clinical trials for the treatment of IPF in the United States. The company provides pirfenidone under the Pirespa trade name for the treatment of IPF in Japan and South Korea; and is also approved for the treatment of IPF in China, India, Argentina, and Mexico. Its research programs are focused on the discovery of targeted, small-molecule therapeutics and biomarkers to treat and monitor serious pulmonary and fibrotic diseases.

Review the 1-year chart of InterMune (Nasdaq: ITMN) with the added notations:

1-year chart of InterMune (Nasdaq: ITMN)

ITMN has been trading sideways since the beginning of June while. During that period of time, the stock has formed a $47.50 resistance (red) and a $40 support (blue). A break above $47.50 would also be a new 52-week high.

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The Tale of the Tape: ITMN has formed a clear 52-week high resistance at $47.50. The possible long positions on the stock would be either on a pullback to $40, or on a breakout above $47.50. The ideal short opportunity would be on a break below the $40 level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach