Merrimack Pharmaceuticals Inc (NASDAQ: MACK)

Merrimack Pharmaceuticals, Inc., a biopharmaceutical company, engages in discovering, developing, and preparing to commercialize medicines paired with companion diagnostics for the treatment of cancer primarily in the United States. Its therapeutic oncology candidates in clinical development include MM-398, a nanotherapeutic encapsulation of the chemotherapy drug irinotecan, which is has completed Phase III clinical trials for the treatment of patients with metastatic pancreatic cancer whose cancer had progressed on treatment with the chemotherapy drug gemcitabine; in a Phase I clinical trial as a monotherapy in patients with glioma and in combination with cyclophosphamide in patients with pediatric solid tumors; and in a Phase 1 translational clinical trial designed to identify predictive biomarkers associated with MM-398.
Take a look at the 1-year chart of Merrimack (Nasdaq: MACK) below with my added notations:

Over the last 4 months MACK had created a key trendline of support (green), which was also a prior resistance, and that level was also the “neckline” support for the stock’s head and shoulders (H&S) reversal pattern. Above the neckline you will notice the H&S pattern itself (red).
Remember, patterns such as an H&S need to confirm to have the meaning that they imply. Confirmation of the H&S occurred when MACK broke below its trendline support.

The Tale of the Tape: MACK has confirmed a head & shoulders pattern. A short trade could be entered anywhere near the prior trendline with a stop placed above that level. A break back above that trendline could negate the forecast for a move lower, thus a long position could be considered instead.
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