Deeply Underwater Horizon

Horizon Pharma, a prior multi-year winner in the healthcare sector, is down a cool 24% this morning in reaction to an 8-K the firm filed with the SEC. 

While the temptation may be to state that these types of moves are overdone to the downside, a function of the ubiquitous "everyone is scared of markets" argument these days, in reality HZNP is clearly on the other side of its momentum mountain. 

The weekly timeframe, below, illustrates this point, with the steep prior uptrend unraveling in the cold, unforgiving manner for which they are notorious. And the recent consolidation, where many assumed a bottom was forming, could easily now setting up the next leg lower as the momentum mountain disintegrates. 

Earnings are not for another month, and it would not surprise me to see HZNP and other big pharma firms now make fresh 2016 lows, perhaps even retracing the move back to early-2014 in the single digits. 

Momentum cuts both ways, and HZNP is a former winner--One we trades for Members a few times on the long side last year, for example--which is now cleaning out the excesses of its prior move.