Here What the Chart Says

News hit Mondays morning that billionaire hedge fund manager John Paulson is joining the board of beleaguered biotech stock Valeant Pharmaceuticals International Inc. (VRX) . Shares are up 6% in reaction to the news today.

Paulson’s new role at Valeant comes after he became the firm’s biggest shareholder, picking up a 5.7% stake worth $255 million at current price levels.

And notably, Paulson & Co.’s big bet on Valeant follows after another well-known hedge fund billionaire, Bill Ackman, who publicly got out of Valeant earlier this year.

So, which billionaire is right?

Should you be buying Valeant with both hands right now? Or is today’s pop in shares your chance to cut and run?

To figure out the near-term for Valeant’s price trajectory, we’re turning to the charts for a technical look.

For starters, it doesn’t take an expert technical trader to figure out that Valeant’s stock has been under a lot of pricing pressure this year. Year to date, VRX has lost about 10% of its market value. Zoom out to this stock’s highs back in the fall of 2015, and that selloff ramps up to about 95%.

Along the way, Valeant has been extremely technically obedient — in other words, the bearish trends haven’t been hard to spot, and shares have reacted fairly predictably to key price levels.

But something changed back in May.

Meanwhile, Jim Cramer and the AAP team dig into energy often. Get their insights or analysis with a free trial subscription to Action Alerts Plus.