I'm Stalking Gilead

 | Mar 07, 2014 | 6:00 AM EST  | Comments
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The last time I looked at Gilead Sciences (GILD), it held key symmetry support and we did see a nice rally off the zone, though it did fall a bit short of our ideal upside target.

Hopefully you exited with a trailing stop with some cash. Remember, we don't always get our targets on these setups, which is why it is important to manage any of these trade setups.

With the healthy decline in the biotechs today, the question is going to be, is this an opportunity to buy this stock, or do we have a more important high in place? Nobody has the crystal ball with the answer to that question. But we can however define what area in price should ideally hold to consider another buy entry. We can also look at Fibonacci time analysis to help us make a decision.

First, let's look at price on the daily chart. Here, I am seeing so many similar corrective declines within the uptrend this past year that will help us define key support. I take 100% of these prior declines within the uptrend and then project them from the recent high. After that part of the analysis is done, I look to see if any other Fibonacci price relationships overlap those projections.  Bottom line is I'm looking at a very healthy price cluster that could offer support at the $76.08-78.38 area. So far, we are holding above this key zone. 

 

Gilead Sciences (GILD) -- Daily
Source: Dynamic Trader

 

Now, besides the price analysis, I also see some parameters on the time axis of the market that are also suggesting a possible low. The cycles come in between March 5 and March 12. One of the things I found in doing the time analysis is that there were a couple of corrective declines from the past that lasted six trading days. This is very similar to the current seven-day decline into this key support. Along with the time symmetry, I'm also seeing a few other cycles from other key highs and lows that are illustrated on the chart below.

 

Gilead Sciences (GILD) -- 15 Minutes
Source: Dynamic Trader

 

Now, some traders might just place a bet against the support zone and defined their risk below it. I will typically suggest that you use a trigger to tell you it is worth placing a bet against the zone. I find that using triggers will often filter you out of a setup that will never play out. There will still be some entries that will fail, but more often than not it helps. At this point I am not seeing a buy trigger even on the more aggressive 15-minute chart. So, right now I'm stalking GILD for another relatively-low risk entry. Let's see what it does against the current time and price parameters.

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