A long play! (for those that don't like the idea of shorting)

It has been no secret that I have a very negative view for where the stock market is going (950 on the S&P). There are only 2 types of equities you should consider going into and those are: Consumer Staples (Wal-Mart, Kroger, etc) and Healthcare (with no debt, tons of cash because of the credit crisis). Now I know that this is supposed to be a technical analysis blog but those are the only types of companies I will look at going long in this extremely hostile environment. With that said here is my long play that I've mentioned on this blog before that I've followed for several years now:

Viropharma (VPHM): currently they make Vancocin(R) the only treatment for a life threatening hospital infection called C-Diff. They were initially brought down because the FDA said that generics could come to market sooner and 2-3 years later there are STILL no generics on the market for this drug! They have tons of cash and have recently purchased a new pharmaceutical company I'm assuming to bolster their pipeline. These are the reasons why I have loved this company since the beginning they've been beaten up several times and have found bottoms both times. Now onto the chart:


The important points I want to show here are that the most recent high stopped at the 50% fib level (black circle) and then shot through the 38% level. This means most likely that VPHM is going to come back down to test all of the trend lines. The RSI is close to it's trendline and the 50 level. The MACD has a long way to go down to come near it's trendline and as long as the 10 level holds (there is that upward trendline and the support level at 10 (blue circle).

The reasoning for me thinking that this is a bottom for the stock is because of the other 2 circles (orange and purple) both of the lows are at exact the same level (approximately 7). This is considered a double bottom (IMO). The most important thing on a double bottom is an appropriate volume pattern. In March 06 (the first huge drop) volume was up in the 60 millions, on the second huge drop (April 07) volume was only 30m! Furthermore on the first bottom in July 06 volume was roughly 20m then in the bottom in November 07 the volume was less than 20m (which makes sense because if it really is a bottom the selling pressure should be less).

Now here is my gameplan for this security:

1. Wait until bailout happens
2. Wait to see how badly it tanks (probably down to the trend/support at 10
3. Make sure it holds this level
4. Buy calls and then ride it up to about the 17 level as that would make a new higher high with lower lows water fall sell out of the call and then wait until it falls back to the trendline/fib level
5. Make gobs of money!

We'll see how this plays out but this might be ready to be played in a few weeks!

Jason