Has Valeant Found Long-Term Technical Support?

After a more than 51 percent sell-off in Tuesday’s trading session, Valeant Pharmaceuticals Intl Inc VRX bulls were hoping for a technical bounce-back on Wednesday. Unfortunately, a modest morning bounce was met with even more selling pressure, and the stock is only up about 1.3 percent in early afternoon trading.

The bottom has fallen out of Valeant’s share price in the past six months, leaving technical analysts scrambling to find possible support levels for the stock. Valeant is now trading at its lowest price since 2011, and it has already crashed through any potential support levels that were established since.
 

In fact, 2011 is the first place to look for potential support. After hitting new highs at around $57 in mid-2011, the stock then pulled back to around the $32 level. Today, Valeant briefly traded as low as low as $31.20 before recovering to the $34 level. If the stock closes above $32, it could be an early indicator that this level will again serve as long-term support.

Looking back even farther into the past, you can see that the $32-$39 range served as resistance for the stock several times in the early 2000s, providing even more evidence that the mid-$30’s could now serve as support.

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If Valeant does end up finding short-term technical support in coming days, it’s important to remember that negative headlines related to Valeant’s ongoing SEC investigation would most certainly make any technical support for the stock a mute point.

Disclosure: the author holds no position in the stocks mentioned.