GlaxoSmithKline Plc (GSK) was upgraded today to a buy by TheStreet.com's quantitative service. Regular readers of Real Money and Kamich's Korner should have noticed that over the past three years I like to combine investment techniques. I really like it when fundamental analysts, quantitative analysts and technical analysts like a stock. Let's see what the charts of GSK look like today.
In this daily bar chart of GSK, below, we can see how prices have rallied from the November/December lows. For the past four months GSK has been in a sideways to slightly higher consolidation pattern. Prices have crisscrossed the rising 50-day moving average line. The 50-day average crossed above the 200-day average in late April for what is commonly called a golden cross. The daily On-Balance-Volume (OBV) line turned higher in November with the price action but it has leveled off in recent months. The Moving Average Convergence Divergence (MACD) oscillator is holding just above the zero line and renewed price strength should turn this indicator bullish again.
In this weekly bar chart of GSK, below, we can see that prices are above the now rising 40-week moving average line. The weekly OBV line has been strong since December and supports and confirms the price advance this year. The weekly MACD oscillator just crossed to the downside generating a take profits sell signal. This signal could get reversed in the weeks ahead.
In this Point and Figure chart, below, we can see that prices are poised to make a double top breakout. A trade at $43 would be bullish and could open the way to a $58 price target.
Bottom line strategy: Risking below $39.50 traders could go long GSK here and buy more above $43. The $58-$60 area is my price target.