'Longing' for Acadia Pharmaceuticals? Here's How to Play It

 | Aug 09, 2017 | 3:33 PM EDT
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Acadia Pharmaceuticals Inc. (ACAD) rallied today with a gap to the upside and strong volume. Can this advance continue and challenge the February highs? Let's see what the charts and indicators suggest.

In this daily bar chart of ACAD going back 12 months, below, we can we can see the price gap or void as prices surged above the rising 50-day moving average line and the rising 200-day moving average line. The daily On-Balance-Volume (OBV) line has been rising since late May and suggests that buyers of ACAD have been more aggressive before this latest burst of strength. The Moving Average Convergence Divergence (MACD) oscillator turned bullish in July as it crossed above the zero line.

In this weekly chart of ACAD, below, we can see the sideways trading range since early 2016. Prices have traded back and forth around the flat 40-week moving average line. The weekly OBV line showed some strength in 2015 and 2016 but it has been most neutral this year. The weekly MACD oscillator is crossing to the upside from below the zero line for a cover shorts buy signal.

This Point and Figure chart of ACAD, below, shows the breakout without a gap. An upside price target of $38.50 is shown.

Bottom line: ACAD looks strong enough for a rally to the upper $30s but a close above $40 will be more impressive. Trade ACAD from the long side with a reasonable stop. A breakout above $40 could mean a longer-term rally into the $50s.

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