VYNE Therapeutics Inc. has caught my attention recently after they announced a reverse stock split at a ratio of 1-for-4. As a novice trader, I am now interested in observing this stock's behavior as it starts trading on a split-adjusted basis, apparently on February 16th. Consequently, I have opened a position with the belief that the price will see an uptrend.
I do not believe stock splits change fundamentals, but there are good reasons to believe that decreased liquidity of stocks may increase the price in the near future. The primary objective of the reverse stock split is to reduce the number of shares outstanding to a number more consistent with other companies with similar market capitalizations as VYNE, as further described in the Company’s last proxy statement (GlobeNewswire).
Technical Indicators (1h)
Strong support seems to be forming around 2.50
Seems too low volume to justify the current down trend
Looking at oversold signals from RSI near support (highlighted in orange)
Looking at the MACD for a crossover (highlighted in orange)
I have orders set for half my position at 2.65 and half at 2.50 if price drops to that support; I think entering in that range is acceptable.
Please feel free to comment on my analysis. Despite having traded for a while, I am fairly new at technical analysis and would love to learn from experienced people in this community.
Comment
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It is important to remember that this decision could also be a desperate one from the Company, in order to keep being listed on exchanges. The fundamentals or market value aren't impacted, only liquidity, which can be easy to forget once the price shoots through the roof. Therefore it is crucial to remember that if this hypothetical uptrend presents itself, the fundamentals might eventually bring the price down.
Trade active
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Price testing support zone around 9.80.
Trade closed: stop reached
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I got out of this one at 9.79. The reverse stock split has apparently killed all upward momentum, so I will see if this is still a good play to enter when the downtrend slows.
@abel11, Glad you found it helpful. I have no idea of what will happen, but it is nice to see the company willing to boost its price to be more appealing to investors.