Regeneron Pharmaceuticals (REGN)

Company

"Regeneron is a biopharmaceutical company that discovers, develops, and intends to commercialize therapeutic medicines for the treatment of serious medical conditions. Regeneron has therapeutic candidates in clinical trials for the potential treatment of obesity, rheumatoid arthritis, and cancer. The Company also has preclinical programs in asthma, allergies, and other diseases and disorders. Regeneron has developed several proprietary platform technologies, which it has incorporated into a comprehensive discovery and development process designed to understand thoroughly the biology of specific disease states, discover potential therapeutic candidates, and evaluate these candidates in clinical trials." (company website)

Buy

6-May-05. Regeneron has been trying to break out of a long downtrend. REGN has been moving steadily upward since April 25 when it broke the upper Bollinger band. I decided to jump in after three days of advances with heavier-than-normal volume.

Price momentum (PPO) has reversed and is now increasing. Buying pressure (+DI) has risen and the trend (ADX) is strengthening. Money flow (CMF) has improved from very negative to neutral. Relative strength (RSI) is on the rise. All the omens are right.

What I failed to note is that REGN has been riding at or above the upper Bollinger band for two weeks, something that surely can't continue uninterrupted. And sure enough, about half an hour later, REGN went south. And then I did something rash, but reasoned: after the plunge turned around, I bought another lot (this lot) to lower my average share price. Fasten your seat belts in case of unexpected turbulence!

(20-May-05) After REGN headed south again this morning, I prepared a stop-limit order to sell this lot if REGN trades below the low it reached on Monday ($5.92).

Sell

20-Jun-05. For the past week, I've been watching REGN take giant steps upward for no apparent reason. I decided to sell today for two reasons:

1. REGN is up 40% in the last week. That's too much, too fast. It can't last. The previous time it jumped up five times in a row (29-Apr to 5-May), it fell for the next seven days in a row. The upper Bollinger Band is 2 standard deviations away from the mean (in my chart), so breaking beyond it for so many consecutive sessions is going to be a very rare event, indeed, statistically speaking.
2. At its current price, the profits on this lot of REGN cancels out the loss I took earlier on REGN, and still give me a respectable profit besides (+9%).

It's tempting to follow the "If only I hadn't bailed out on those other shares..." road, but that way lies the Land o' Greed. Besides, if REGN is really going up, up, and away, I can jump in again after the inevitable pullback.