We last reviewed Biogen Inc. (BIIB) at the end of May, where I wrote that, "In this Point and Figure chart of BIIB we can see a breakout at $288.17. The upside price target at $339.20 is not as far away as it was two weeks ago." And I concluded that "BIIB is moving up nicely. Traders who went long following my last update could raise sell stop protection to $275. Aggressive traders could add to long positions." With prices gapping up around $335-$336 this morning on news of its successful Alzheimer trial, another visit to the chart professor is warranted.
In this daily bar chart of BIIB, below, we can see prices plotted through Thursday's close. You need to use your imagination and see prices trading in the $330-$340 area. This would be an impressive gap above the 200-day moving average line and the June high.
I get a sense that this gap is not likely to be filled. Prices were already above the rising 50-day moving average line -- and you can see two successful tests of the line in June. The daily On-Balance-Volume (OBV) made a low in April and zig-zags higher. The trend-following Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in May for a buy signal, and is now close to a second go-long signal.
In this weekly bar chart of BIIB, below, we can use our imagination again to visualize prices in the $330-$345 area. The chart shows some prior trading above $345, but prices were only there for about two weeks so I would not anticipate much overhead resistance.
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The weekly OBV line for BIIB shows a low in May 2017 and an irregular rise. Strength in the OBV line in May and June of this year is interesting and suggests that some investors may have been buying in advance of this news. The weekly MACD oscillator crossed to a cover-shorts buy signal in late May and could soon cross above the zero line.
In this Point and Figure chart of BIIB, below, I used weekly high/low data to generate a longer-term price target of $416.
Bottom line: If you are long BIIB based on our prior recommendations you are probably smiling this morning. Yes! Raise sell stop protection to $305 from $275. Prices are likely to trade sideways in the $330-$350 area before moving up to $370 and then my $416 price target.