Insys Therapeutics, Inc., a commercial-stage specialty pharmaceutical company, develops and commercializes supportive care products. It focuses on utilizing its proprietary formulation technologies to address the clinical shortcomings of existing commercial pharmaceutical products. The company markets Subsys, a proprietary sublingual fentanyl spray for breakthrough pain in opioid-tolerant cancer patients; and Dronabinol Oral Solution, a proprietary orally administered liquid formulation of dronabinol. It offers its Subsys through its incentive-based commercial sales force.
Take a look at the 1-year chart of Insys (Nasdaq: INSY) below with my added notations:
INSY peaked last March at $58 and lost over 60 percent of its value from there. The stock based out over the next (3) months, started to rally from there, and all the while has hit a very important level of resistance at around $42.50 (red). No matter what the market has or has not done since April, INSY has not been able to break through that area of resistance.
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The Tale of the Tape: INSY has a key level of resistance at $42.50. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $42.50.
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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach