It's still too soon to say Savient Pharmaceuticals Inc. (NASDAQ:SVNT) is off and running. In fact, the stock's decidedly NOT off and running yet. But, it's not too soon to put SVNT on your watchlist of potential breakout candidates, as it's much closer to a breakout than most anyone can see.
Just to set the stage here, the nearby weekly chart of SVNT tells us with more than a little clarity that shares have been working their way into the tip of a wedge shape for a few months. Though we're not quite to the point part of the triangle formation yet, we're getting close, and we're already at the point where traders start to fish for a little more elbow room, meaning that slingshot pressure is brewing. In other words, Savient Pharmaceuticals may not actually move all the way into the point of the triangle pattern before getting squeezed out of it.
When you zoom into the daily chart of Savient Pharmaceuticals Inc., however, that's when we really start to see some of the more important - though more philosophical - bullish hints.
We can still see the rising support line here that makes the lower edge of the wedge shape on the weekly chart. What you can also see here on the daily chart is how SVNT has wiggled its way above several short-term moving average lines... the 20-day line (blue), the 50-day average (purple), and the 100-day moving average line (gray). Crosses above those lines are clearly bullish, and moving above all of them means Savient is bullish in all three key timeframes (which is an important condition in itself). It's the proverbial X-factor of the cross above all three key moving averages such a bullish clue now, however.
Ever heard the phrase "periods of low volatility are followed by period of high volatility, and periods of high volatility are follower by periods of low volatility"? It's one of the market's many cliches, but like so many trading-related cliches, it's true. The relevance now is, SVNT has been in a low-volatility phase of late. Though we've seen some mild swings within the framework of the wedge pattern, the fact that all three of those key moving average lines are converge so tightly confirms that Savient Pharmaceuticals haven't actually made much progress in either direction in quite some time.
The implication is, a period of high volatility is around the corner, poised to de-coil the spring that got wound so tight since May as SVNT became a less and less volatile stock. Given that shares are getting comfortable above those key moving average lines, odds are that volatility is going to be unleashed in a bullish direction.
It's not happening yet, but it's definitely worth keeping on your radar. A move above $0.75 would do the trick, and a healthy move above the 200-day moving average line (green) at $0.81 would most definitely light the bullish fires.
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