Arena Pharma - Profit booking ainticipated, re-enter at lower levels

Stock has more than doubled from its mid- April lows since the positive news on the Lorcaserin has been published. It is moving strength to strength and is on a vertical upswing. Stock is trading at 38% premium then its 200 day moving average. This is a huge premium which needs mean convergence. The RSI indicator is overbought and is currently at 79+.

One need to book some profits in the stock and wait to get it closer to its average to re-enter. Overall due to successful trial of its main drug, the stock looks promising.

If stock corrects, which it should, one should either buy closer to nearest average and maintain the same average as stop lost. If stock goes below its moving average(200 day) then wait and let it cross back its 200 day average to re-enter.