Ok conspiracy theory fans, I think I might have just freaked my own self out!
I was just having a good conversation with @zarlengor on StockTwits. He was basically saying that there may be no run up into earnings and we may quietly move out from accumulation and into a markup phase come April. He noted the expiration date of when to join these class actions was in early April, also the timing of the lawsuits seems strange being so far after the event that caused them being in November. He also brought up the thing in March where IRWD should get the results about the safety of their drug, and wouldn’t it be something if it came back unsafe.
These were all very good points and just as plausible as anything I had come up with. I had made a mental note of the IRWD test when I first read about it, but unfortunately, my head is full of lots of dead space with few cabinets to store information in. Fortunately, thought, his comment jogged my memory. He inspired me to take another approach. Instead of analyzing SGYP, let’s analyze IRWD and see if there is any correlation between the two, especially with upcoming news that will effect both.
First thing first, break out the old The Wyckoff Method: A Tutorial to use for reference. Go to the Distribution schematics #1 and #2. Now this:
Under schematic #1 are descriptions of each of those markers and under schematic #2 are characteristics of each of those phases. With an open and unbiased mind, see if you agree with what I did above on IRWD’s weekly chart. Also, I didn’t mark up the volume, but I found it generally goes hand-in-hand with what it should be at each of those markers and validates them as being legit. But, please double check me on that. The idea here isn’t for me to be some teacher, I’d rather this be a collaboration of minds. Case in point, the whole reason I’m doing this is because of someone else’s input that made a lot of sense… thank you @zarlengor!
One little side note about something I always say. The best place to trade, for me, is after a retest of a breakout. On the chart above, look at that show of weakness (SOW) towards the end. That was a major break of that support line. Right after, it popped back up and retested that same breakout area. That is clear as day! Almost too clear? I’m going to place a paper trade and open a short position in IRWD for Monday, just to see how it plays out.
Ok, back to it. If you use that tutorial as a reference, everything annotated on there should be self explanatory. But, I did add a little extra that I found VERY interesting, and opens the door to some good juicy conspiracy theories.
See that yellow line that was moving up relative to IRWD, then took a major poop on itself at broke down at the beginning of last year? I will give you one guess to figure out what that is. Did you say that is the SGYP weekly compared to the IRWD weekly? You’re so smart!
If you don’t see it already, here’s what’s so interesting. Start at the buying climax (BC) on IRWD and follow that run up down to where it started. If you do, you will notice you intersect the SGYP line that starts its initial down move, which was right after they got FDA approval.
There it is, I zoomed in on it and highlighted the intersection. I also want to explain that BC real quick. I had a hard time identifying it, so I want to explain it so you don’t think I’m just picking a point that suites my emotional needs. Actually, I had marked up IRWD’s chart before I overlayed the SGYP comparison, so I didn’t know it would work out like that before hand. I identified the BC by looking at the candle first. That arrow points to that long ranged candle with the big upper wick (shooting star). Then if you look at the volume on that day, and the preceding days, you can see the expansion in volume that lead up to that candle which has the largest volume. That upper wick was most likely a bunch of selling by the manipulators, which accounts for the majority of that volume.
So, it seems that manipulators started taking SGYP down to its current low, just as they were starting to distribute IRWD at its current high. Go figure! If I were Mulder from the X-Files, I might think manipulators were setting things up to get out of IRWD at it’s high and accumulate SGYP at it’s low for a possible change in market leader? But, that’s a silly idea.. isn’t it? Off course it is! Especially if you consider it happened right when SGYP got FDA approval to make them officially a competitor to IRWD, with an FDA approved superior drug no less. Pffft!
One last thing to add to that crazy idea. Remember that lost file in my empty head that @zarlengor was so kind to find for me? That study ends next month, which is immanent. The mark down phase for IRWD is immanent. If that study came back with bad results, IRWD’s demise would be immanent, which would mean SGYP’s rise to taking over the GI space would be immanent. How is that for timing?