BioMarin Pharmaceutical Is Doing Better but Patience Is Needed

 | May 11, 2018 | 12:11 PM EDT
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BioMarin Pharmaceutical Inc. (BMRN) is showing improvement lately. Way back on November 29, 2016 BMRN looked promising and I said, "A weekly close above $100 is bullish and could be the start of a rally to the $130 level."

With the benefit of hindsight we can see (look at the second chart, below) that prices never made a weekly close above $100. Prices have traded sideways to lower since. Once again prices look promising but resistance in the $90-$96 area is likely to cap the upside a little longer.

In this daily bar chart of BMRN, below, we can see that prices have rallied in the past few weeks to climb above the now rising 50-day moving average line and the still declining 200-day line. Chart resistance can be seen in the $90-$96 area above the market.

The daily On-Balance-Volume (OBV) line has moved up and down with the price action and only in the past two months or so it has diverged from the price action. Prices made new lows in early April but the OBV line did not. It could mean that selling has dried up.

Looking at the price momentum indicator in the lower panel we can see a higher low from February to April even though prices make lower lows. This is a bullish divergence and has probably helped BMRN rally in the past few weeks. 

In this weekly bar chart of BMRN, below, we can see some slight technical improvement. Prices are about to make a weekly close above the declining 40-week moving average line.

The weekly OBV line shows a small improvement and the weekly Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a weekly cover shorts buy signal. 

In this Point and Figure chart of BMRN, below, we can see that prices have rallied with a small breakout over $86.45 but short of clearing the resistance up to $95.50. A potential $104.62 price target is shown and this would be a longer-term breakout should it happen. 

Bottom line: BMRN has improved recently. The upswing is welcomed but it still is not an important breakout of the two-year sideways pattern (look at the weekly chart, above). I will be missing the bottom but I think waiting for a weekly close above $100 is the best way to invest in BMRN.

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