The last time we visited with Gilead Sciences (GILD) was April 26. Prices had risen sharply from an early February low and we looked for further upside: "Traders who know that they need to book a profit on this 'trade' should look to buy a shallow dip in GILD maybe to $99 or $98 and look to sell on approach to $115."
Looking at a chart of GILD, below, you can see how that turned out. There was no rally to $115 but also no shallow pullback to buy. Prices fell sharply at the end of April and in three weeks gave back three months of gains.
In this updated daily chart of GILD, above, we can see that GILD has been testing the $82-$81 area in May and June. Prices are below the declining 50-day and 200-day moving averages. The On-Balance-Volume (OBV) line has been weakening with the price action and is lower now than at its May low. This new low for the move down in the OBV line suggests that sellers remain aggressive and continue to liquidate long positions.
On the plus side, there is a bullish divergence between the equal lows in price in May and June and the higher lows on the momentum study -- the selloff in May was different than the selloff in June.
In this weekly chart of GILD, above, we can see that the slope of the 40-week moving was what we should have paid more attention to in April. The positive slope from mid-2013 to mid-2015 was the way to position investments in GILD. The slope turned negative in early 2016 and that, too, has been the way to go.
The 12-week momentum study in the lower panel needs to be watched. Is the downside momentum slowing or are we watching just a pause in a downtrend? A new low for the move down at $80 might be just enough weakness to prompt further declines to $70 or lower.