Akorn Pharmaceuticals (AKRX): Sharp Bear Trap From Below $2.50 Expected To Continue

It can be said without fear of contradiction, that whereas this really has been the year of the drugs sector, Akorn has not joined the party. This observation is derived at least in terms of its share price, if not its valuation, which at current levels appears to be in the bargain basement area. Indeed, looking at the assets of the firm, the sum of parts really does hint at something well north of where we are now.

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However, going purely by the near term price action, there is plenty for technicians to chew on currently. We have been treated to a sharp bear trap rebound from below the former 2019 intraday low of $2.64 and the $2.50. This is the type of final flush out / exhaustion move that one sees ahead of corporate action – although normally there is a delay before such events happen.

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In the case of Akorn though, one would expect to see a stock price reaction back towards the area of the 50 day and 200 day moving averages near $4, similar to the spike towards the 50 day line at the beginning of August. Only a fresh probe back below $2.50 would really hint that the breakdown in the stock is set to continue and this is not expected for now.

 

Author: Zak Mir

Financial commentator, interviewer, technical analyst

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