VRX Stock: Time for a Comeback
Will 2017 be the year that Valeant Pharmaceuticals Intl Inc (NYSE:VRX) stock finally makes a comeback? Such a question is difficult to answer because the bearish trend toward lower prices has been relentless, and my quest to find a bottom in Valeant stock has been a frustrating ordeal as the price continues to make new lows.
I have been looking for a bottom to develop for some time now, and the catalyst that set me on this adventure is that many bear markets end after a company has lost 90% of its market value. VRX stock fulfilled that requirement long ago, and I have been looking for a bottom ever since.
There were a number of instances during which I believed I had finally found what I was looking for, but the Valeant stock price quickly retreated in such short order that I didn’t even have a chance to get my hopes up.
I am pretty sure that I have now found what I am looking for, and the following VRX stock chart illustrates the level that will indicate that a bottom has finally been forged in Valeant stock.
Chart courtesy of StockCharts.com
The VRX stock chart above illustrates a horizontal level of resistance that is labeled “the line in the sand.” This is the price point at which I first believed that a bottom was being forged but, to my dismay, VRX stock fell below this level in November after the company released a poor earnings report that missed on both the top and bottom lines. This event caused the price of Valeant stock to slice right through this level as if it wasn’t even there.
In my last report on Valeant stock on November 15, 2016, I outlined this exact level of resistance as VRX stock had once again returned to this test this level from beneath. I explained that if VRX stock was unable to penetrate this level, it would most likely trade lower and test the lows that were created around $14.00.
My words were not ill spoken, as Valeant was unable to penetrate that level. A few short weeks later, VRX stock was testing the lows at $14.00. The good news for those like myself, who are looking for a bottom, is that Valeant stock failed to fall below this level, and it now seems as though VRX is going to stage another attempt at “the line in the sand.”
I am going to go out on a limb here and state that if VRX stock can break above this level, and remain above it for two consecutive closes, it would indicate that the ever-elusive bottom in Valeant stock has finally been put in.
A break above this level would also break the downtrend that has contained the price for what seems like eternity, as illustrated on the Valeant stock chart below.
Chart courtesy of StockCharts.com
The bearish downtrend that is highlighted on the above Valeant stock chart has served to contain the price, as this bear market has completely ravaged the VRX stock price.
This bearish trend is defined by connecting the peaks on a price chart. Lower lows and lower highs saturate this trend, and there is no denying the gravity of a trend that moves from the upper left to the lower right. This is a clear example of bearish price action. Shares will continue to trade with a bearish bias for as long as the trend line remains intact.
Taking out the resistance level labeled “the line in the sand” would also break this downtrend in the process. This would equate to one signal indicating that a bottom has formed, and the another signal confirming this bottom.
Bottom Line on Valeant Stock
I am still on the lookout for a bottom in Valeant stock, and perhaps 2017 will the year that this feat is finally accomplished. I am waiting for the price to cross a certain threshold, at which point I will be confident in saying that a bottom has finally been forged in VRX stock.