Shares of Regeneron Pharmaceuticals (REGN) are down sharply today but that may be creating a buying opportunity. Let's look closer.
REGN is down today but with some eventual hindsight it may just be another retest of the flat 50-day moving average line. The On-Balance-Volume (OBV) line is basically neutral (see the chart above). Prices made equal lows in February and March while the 12-day momentum study made higher lows giving us a bullish divergence.
We have a mix of signals on this weekly chart of REGN, above. Prices are below the declining 40-week moving average line. The decline stopped at the early 2014 highs at $350, proving once again that prior resistance can become support on the way down. The OBV line is flat on this time frame but the Moving Average Convergence Divergence (MACD) oscillator generated a "cover shorts" buy signal.
Bottom line, I think REGN can do better from here but how do you buy a falling knife? Aggressive traders can go long REGN on the first up day -- the first day from now that REGN is closing higher you buy it and have a sell stop under the low of the move. Only add on strength and $450+ is my upside target.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
It's not the merits of the deal from a long-term perspective I want to trade. It's the beat down of the stock from above $13 to under $11.
Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation.
If you have questions, please contact us here.
Email
Email sent
Thank you, your email to has been sent successfully.
