We wrote about bluebird bio Inc. (BLUE) way back in January. Prices have rallied significantly in the past four to five months from around $70 to $120.
Some indicators look extended now so I think it is time to nail down profits. Let's look at a daily and a weekly charts to make our case.
In this daily bar chart of BLUE, below, we can see how prices rallied from $70 at the end of January to $100 in March. Prices corrected down toward the rising 200-day moving average line in May and then soared this month to $120. Some traders may become emboldened by a quick $40+ rally but this kind of performance has me itching to take profits. Prices are above the rising 50-day and the rising 200-day moving average lines. The daily On-Balance-Volume (OBV) line shot up sharply this month was traders seemed to rush into this name. A quick upside jump in the OBV line tells me that we now have a lot of new longs with entry prices at high levels. The Moving Average Convergence Divergence (MACD) oscillator is crossing to the downside for a take profits sell signal.
In this weekly bar chart of BLUE, below, we can see that prices are above the rising 40-week moving average line. We also see that there is a band of resistance in the $120-$140 area in 2015 as prices found support there before sinking lower. The weekly OBV line is positive but certainly not showing strong accumulation. The weekly MACD oscillator is bullish.
Bottom line -- what is that old saying about gift horses? If you bought BLUE back in late January when we recommended it you have done well and we would take profits.