Achillion Pharmaceuticals Inc (NASDAQ:ACHN) has jumped more than 20 percent in today’s session to $7.26 with traded volume of 6.25 million shares till now. The surge in price seems to be backed by strong volume figure as the share price maintains the average traded volume of 0.917 million shares per day.
If we look at its price history the ACHN traded within the prices ranges of $2.00 to $7.65 in last one year. The respective prices ranges can also be taken as its support and resistance levels, but it seems the current bullish drive could define a new resistance level for the share price.
In fact the price history of ACHN tells a lot more. ACHN has been moving in strong bullish trend since December 2010. The reason behind the surge at that time was the news of acceptance of company’s ongoing clinical studies for presentation at 21st Annual Conference of Asian Pacific Association. Probably traders were looking at it as a big breakthrough but the in reality hopes were associated with better financial results.
Disappointment came when the company reported the net loss of $10.13 million for the 1st quarter 2011 as compared to net loss of $6.24 million in prior quarter. Likewise the share price took substantial beating in the stock market and fell to $4.67 on May 5th, 2011.
Today the share price has surged with good volume numbers again. The news is that the company has announced underwritten public offering of 9.6 million shares of its outstanding common stock at the price of $5.90 per share.
Now looking at it logically the share price is trading near its resistance level. The company itself is offering additional public offering at $5.90 per share. Can ACHN hold its bullish rally? In my opinion, fundamentals certainly do not back the current market price as the company is in heavy losses.
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