Thursday, September 17, 2009

A name that has been popping up during the past few weeks is Jazz Pharmaceuticals (JAZZ). With roughly a 24% short interest and multiple volume spikes on the daily chart caused by various drug news and takeover chatter, JAZZ has been on our radar. As shown in the release (bottom right in image above-click to enlarge), there was heavy insider buying on 9/4/09. We can see on the daily chart at bottom left that this buying contributed to a bullish move on 9/4.

On 9/8/09, the next trading, JAZZ presented a profitable trading opportunity. On the 1-minute chart, JAZZ was ranging roughly between $9 and $8.50 on relatively low volume. Around 8:54 CST, strong volume came in and JAZZ broke out of that range. As volume continued to build, the 1-minute candles close on their highs, which is quite bullish. As shown in the Trading RM Real-Time blast (top right above), several traders saw the volume spike via our customized filters and were getting long at 8:56. JAZZ took a couple of minutes on low volume to breathe, but when the takeover chatter came through at 8:59 CST, it was off to the races.

Our traders sold a portion of their positions into the move around 9:00. Some held a few contracts in their back pocket to take advantage of the continuation as JAZZ surged over $11.00.

By paying attention to spikes in volume and the breakout of the daily range, our traders were able to get into JAZZ before the takeover chatter came through on Briefing and book a solid profit during the rip.

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