Stock Chart SQNM

Posted by downtowntrader | 3/15/2009 11:01:00 PM | 0 comments »

Stock Chart Analysis SQNM

Sequenom, Inc.(Public, NASDAQ:SQNM)

There is a possible double top forming in SQNM that is quite large. While Biotechs were outperforming over the past several months, they have come under increased selling recently. Notice in the chart below that SQNM had a nice rally sparked by a high volume breakaway gap in June 2008. After more than doubling in price, it began to consolidate for a few months. It attempted to breakout but quickly reversed after what has to be labeled as an exhaustion gap. It attempted to rally after correcting, but ended up setting a lower high, and a potential double top. For the double top to complete, it would need to close under the low set after the first top near $12.

SQNM has been quite weak lately, and is bouncing into moving average resistance as the general markets are starting to become overbought. It also looks like the 50 day moving average will cross beneath the 200 day moving average completing a death cross.

The one area where I am seeing conflicting evidence is on the volume. The overall volume on the selloff is much higher than any other period, but that could be interpreted either way. On the one hand, it's disconcerting to see the increase on a selloff, but it can also show a level of panic hinting at the stock becoming oversold. The other strange thing is that the largest volume bars during the past two months have been on days where it closed higher. This can also be interpreted several ways. It's hard to say if someone is buying on these days, or if institutions are taking advantage of the price increase to unload more shares.

In the end, price action is the most important factor on a chart, and SQNM has been looking bearish. If the market resumes moving lower after the recent bounce, it could drive SQNM under this large trading range and set up for a quick drop.

Good Trading,


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