Gediminas Jasionis

Discovery Laboratories, Inc. (NASDAQ: DSCO) - Struggling, But Still Drives Stock Price Here And There

by Gediminas Jasionis October 1, 2009
discovery_labs.jpgShare price of Discovery Laboratories, Inc. (NASDAQ: DSCO) rallied after the company  received the OK from the FDA to proceed with the development of their lung drug program. The drug in question - Surfaxin, had raised some question in earlier application for approval. The company said they will get this resolved by mid Q4 this year.

So there is now hope the drug can actually get approved. But while the news raised stock traders enthusiasm just for one day. Price's drop along with the overall market on Thursday has demonstrated the news effect is already gone.

Until the company struggles to push their drug to the FDA their stock won't be climbing much. The latest push has established a resistance level for not to significant news effects at $1.70. The price will likely return to the earlier established consolidation area between $0.90 and $1.10.

Of course under current circumstances the $1.10 can become a support line as well. Other indicators can't be trusted on this stock as it tends to move mostly on news, lacks in liquidity and the company is still in development stage with lame fundamentals.

In any case, it looks like it is best to wait until the price establishes some support and then swing trade the rage it will stick to. Large price drops are unlikely at this point as the company is rather confidently driving towards their goal of getting the ling drug out. Unless of course they will fail to get it done in the end.


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