Boston Scientific's Latest Quant Upgrade Reaffirms a Breakout Ahead

 | Apr 24, 2017 | 1:34 PM EDT
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Boston Scientific (BSX) is one of the remaining medical device companies (after the announced purchase of C.R. Bard (BCR) today) and it was upgraded again by our quantitative service. BSX was last upgraded back on Jan. 13 and we also wrote about BSX on Jan. 11, when we said, "This long-term Point and Figure chart shows a long decline, a base and a recovery. A move above $24 on this chart opens the way for a $31 price target. Risk is below $21 for now."

With BSX turning upward on the charts in the past week, a fresh update is warranted. Let's dig into the latest charts and indicators.

In this daily bar chart of BSX, below, we can see how prices recently rallied over the flat 50-day moving average line. The 50-day average closed above the rising 200-day moving average line in mid-February for a bullish golden cross.

The On-Balance-Volume (OBV) line has been rising steadily since early December, telling us that buyers of BSX have been more aggressive with more volume being traded on days when BSX has closed higher on the day. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been right on the zero line for the past three weeks and it has just turned up -- signaling an outright go-long signal.

In this weekly chart of BSX, above, we can see how prices have performed over the past three years. The rising 40-week moving average line has defined the uptrend, and trading in the direction of the slope of this moving average has been profitable. The weekly OBV line could be stronger, but it is up from its December low. The MACD oscillator is above the zero line, but the two moving averages that make up this indicator are close to a crossover to the downside. A crossover with the MACD above the zero line would be a take-profits sell signal.

In this Point and Figure chart of BSX, above, we can see a two-year uptrend with a fresh new high at $24 in February. The next price objective for BSX measures into the $31-to-$32 area, and you can see chart resistance from late 2004 and early 2005 that shows resistance starting at $32.

Bottom line: BSX still has room on the upside for further gains. Existing longs and new longs could risk a close below $23.50 and $32 is our first upside price objective.

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