Wednesday, September 2, 2009

CYPB Trading at Support

Cypress Biosciences (CYPB) is a biotech and services firm. Among its products is Savella, a fibromyalgia treatment that received FDA approval in January. Shares have been in decline recently, possibly over concerns regarding Savella revs. Yahoo Finance shows CYPB has nearly $4 cash/sh, a short ratio of nearly 19.

I noted a large $5/10 December call spread going through on Monday August 31st for $1.90 with shares trading at $6.90. The trade would achieve maximum profit if shares reach $10 at expiration. The previous week, more bearish trading in puts was observed.

CYPB has tested support at $7 in January, March, April, May, and now August. Resistance was shown at around $9.75, with a double top in July. RSI and Stochastics show that shares are currently oversold, however, these indicators are not yet heading north.

I entered a long position at $7.00 on September 2nd. Stop placed near the May 4th low of $6.70 in the event that support does not hold.

Update (September 8th): Cypress Biosciences will be presenting at the Baird's conference tomorrow (9/9/09). The stock gained 7% today to close at $7.92, which is above the 200-day SMA with a positive MACD crossover. The RSI and Stochastics are also both very favorable (both are rising and both crossed 50 today, chart below has not been updated to show this).

Update (September 9th): It looks like CYPB may have run into a little resistance at $8.00 today. I sold half my position for $7.92 (a gain of 92 cents or 13.1%).

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