Cephalon Inc - CEPH - cls: 49.99 chg: +1.09 stop: 52.06 *new*
Cephalon followed the broader markets higher today, rallying back into resistance from the converging 200-dma and resistance at $50. It's been setting a series of lower highs, with the 50-dma forming a ceiling. It did tick above the 200-dma of $49.85 by the close, but the closing print of $49.99 shows obvious bearish strength at $50. The recent bounce on the PnF chart into a column of "X's" after the long decline cemented the bearish vertical count at $36, however, with bullish support at $43, it will take a dramatic sell-off to reach that count on the current move. The company announced an agreement with MDS Poteomics to use the MDS' technologies to help develop and market Cephalon's pipeline of small molecule compounds. While that may help the company somewhere down the road, it does not introduce any new products for investors to seize in the short term. Traders can continue to watch for new entries on a break under the relative low of $47.76. We are lowering our stop-loss on the play to $52.06, just above the most recent lower high. A violation of that high would alter the consistency of the downtrend and get in the way of our play objective.