Celgene Looking Healthy

 | Nov 03, 2013 | 6:00 PM EST  | Comments
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I like the buy side of Celgene (CELG) at these levels: I still see this stock as being within a healthy uptrend, and I like that it is above both the 200- and 50-day simple moving averages. In addition, the bullish pattern of higher highs and lows will remain intact as long as the price remains above the Oct. 9 low.

Note that the most recent high was made just short of a 1.272 extension of the prior swing (many moves terminate at such levels), and since then we have seen a symmetrical correction that looks as though it may be terminating right about now.

Celgene (CELG) -- Daily
Source: Dynamic Trader

I'm betting on a resumption of the rally in Celgene against a key price support cluster at the $146.58-to-$147.17 area, which the stock tested as a grouping of Fibonacci time cycles was also evident. On the daily chart below, you can see the confluence of five cycles that came due between Oct. 29 and Oct. 31. The fact that timing coincided with the price test strengthens this setup.

So far, a low has been made at $147.23. As long as the price continues to hold above this key price-support cluster, I would take buy triggers in Celgene, looking for a minimum upside target in the $165.56 area.

The stock has already triggered an entry on the 15-minute chart. A bullish options strategy should be considered.

I will consider myself wrong if price falls $1 below the low end of the price-cluster zone at $146.58 -- my stop level. At that point, I would exit my call spread.

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