The last time we looked in on Gilead Sciences (GILD) , we saw prices still in a downtrend and we said, "the old saying of 'don't fight the trend' has been in operation on GILD for a long time. With no signs of a bottom yet, I would remain on the sidelines of GILD."
In the past three months, prices have bottomed, broke a key downtrend and the moving averages have improved. Let's take a look at where GILD may be headed now.
In this daily bar chart of GILD, above, we can see how prices made a strong close above the 50-day moving average line in the latter part of June. After that strong close, the slope of the 50-day line turns upward. GILD continues higher, to test the declining 200-day line, and successfully closes above it in July. The 50-day average closes above the now flat 200-day average in mid-August, for a bullish golden cross.
The On-Balance-Volume (OBV) makes a turn upward in June. From September to June, the OBV line declines, suggesting that sellers of GILD are more aggressive. From the middle of June, the OBV line rises, suggesting that buyers of GILD have been more aggressive, with heavier volume being transacted on days when it has closed higher.
The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since late June and is now poised for a fresh outright go long signal if the two averages of the indicator cross to the upside.
In this weekly bar chart of GILD, above, we can see the long decline from around mid-2015 until June of this year. Prices are nearly cut in half from above $120 to around $65. GILD spent much of the decline below the downward-sloping 40-week moving average line, but in late June prices rallied above it. The weekly OBV line turned up in June, signaling more aggressive buying on this timeframe. The weekly MACD oscillator has crossed above the zero line for an outright "go long" signal.
In this Point and Figure chart of VLO, above, we can see that a rally in June (look for the "6" on the chart) broke a downtrend from around $99. There is a potential upside price target of $86.04 on this chart.
Bottom line: GILD only turned positive in late June, so we are not far off the lows, with plenty of room on the upside. Prices might test the rising 50-day moving average line in the near-term, and this should be considered a buying opportunity. Aggressive traders could buy available weakness, risking a close below $68. Add to longs on a close above $76, looking for gains to around $86.