Sirtex SRX
Captain, didn’t have time to write a concise review of SRX, so wrote a long one!. Progressive commentary below as I worked through it. (I struck out the Monthly chart comments below as only need to read this if it breaks up from current weekly pennant pattern)
MONTHLY Chart:
Don’t know much about the business. It used to have a lot of media attention I recall so you’d expect to see it bid up by retail investors a few years ago and then slowly bleed out. So that probably suggests the top is in at Dec 2015, but I’m slightly cautious on that. Mainly because of the massive drop and recovery in March 2015 which distorts the chart to some extent, so I’d want to understand what happened fundamentally there to help put that move in some context.
This sort of chart where the stock ramps up exponentially is like a retail stock (see BKL, BAL, CZZ) although there’s still a bit of structure there with those progressive troughs, so a mix of retail and fund managers have presumably been in this. You can see in the Orange trend-lines (solid) I’ve drawn. Normally you get maximum 4 up to a peak on my rules or sometimes 5 before it fails. So that’s further evidence the peak is in at Dec 15, although again cautious as per comment above.
Considering Elliott Wave, it reflects it reasonably, again distorted by that big drop. If the top is Dec 15, then the current bounce is a Wave B. i.e. The stock peaked and fell, found support at 50% of that move up from March 15 and bounced.
Suggests it should continue back up to the 78.6% retrace level before falling further. Initially that dotted Orange line, but usually three subwaves which will work it sideways before it reaches there. (If it keeps going to a higher peak then ok it’s possible, but doesn’t matter for current trading)
Conclusion: Monthly chart suggests heading back up towards $38.24 target in a Wave B. I’d want more evidence though before I’d enter a trade on it.
WEEKLY Chart:
Wow, look at that big gap down in the March 2015 drop and recovery. I think that recovery to Dec 15 might have been the Wave B completing and we’re now in Wave C! That’s very bearish. Should be characterised by five subwaves down, with counter-trends.
Current 7 weekly bars up, and 3 subwaves, meets the definition of a counter-trend in a continuing downtrend.
Has formed a pennant pattern (pink lines), again a continuation pattern.
Current bar opening and closing low is bearish, a two day reversal.
Captain, this is a SHORT! Forget the comments on the monthly above (unless it breaks up from this pattern).
What I expect is that it will hold within the pink lines for the rest of this week, and you want to let it play out till then to make sure. What I like to see on these is that traders move it to the bottom edge of the pennant by Friday. Then it gets attacked on Monday and breakdown.
Pennants are really hard to trade as you can’t wait for confirmation, as too many traders with computer packages that set automatic entries on breakouts means it runs away too quick. Also lots of false breakouts so can trick you and reverse.
Have a look back at the monthly. See the ATH50% level at $20.666, I reckon that’s the target.
Conclusion:
I’m actually interested in trading this on the weekly chart on the basis of that Weekly Pennant. If it behaves properly this week, and moves to the bottom pink line on Friday afternoon, I’ll enter a short in last hour of trade on Friday.
Fundamentals:
What do the fundamentals look like. I assume you’re asking because you think it’s strong. Or was that a trick question – are you shorting this!!?
What's the key themes. Is it affected by AUD falls, or a market fall in US?
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