Why I'm Positive on Novartis

 | Jun 05, 2017 | 4:05 PM EDT
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Novartis  (NVS) was upgraded Monday by TheStreet's Quant Ratings service. Combing this upgrade with bullish charts and indicators looks like a good combo. Let's look closer to see where to buy it and where our recommendation could get recalled.

In this daily bar chart, below, we can see that NVS made a low in late November/early December and then turned higher. Prices rallied and then pulled back twice but the current advance that began in April has been stronger. NVS closed above the rising 50-day moving average line in late April and above the still-declining 200-day moving average line. 

The trading volume is hard to interpret but the daily On-Balance-Volume (OBV) line turned higher in late April signaling more aggressive buying. The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line or in bullish territory but its two lines are crossing to a possible take profits signal or to a possible fresh go long signal -- it all depends on the price action.

In this weekly chart of NVS, below, we can see a bottoming pattern evolving since early 2016. Prices are above the flat 40-week moving average line. The weekly OBV line is bottoming and the weekly MACD oscillator has climbed back above the zero line for an outright go long signal.

In this Point and Figure chart, below, we can see that prices broke out on the upside at $82. This pattern yields a potential upside price target of $92.

Bottom line: Traders could go long NVS here and on gains above $84 risking a close below $78. looking for potential gains to around $92.



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