We liked what we saw on the charts of Celgene Corp. (CELG) in early August, writing that, "If you like to look for price patterns the weekly bar chart is awesome...Looking to add to your CELG long position? I would buy it around current levels or above $140."
Taking a look at the latest charts this morning I find that our last strategy recommendation wasn't too bad as CELG rallied above $145 before correcting this month. A little slowing in the rally has materialized lately so let's check out the indicators.
In this daily bar chart of CELG, above, we can see the pattern of higher highs and higher lows (the simple definition of an uptrend) from late October. Prices are testing the cresting 50-day moving average line but are comfortably above the rising 200-day line.
The On-Balance-Volume (OBV) line shows a nice rise from early June signaling more aggressive buying. There is a bearish divergence between the lower momentum peaks in June and September and the higher price highs. This divergence is fairly spread out and may not be much of a bearish foreshadowing.
In this weekly bar chart of CELG, above, we can see that prices are above the rising 40-week moving average line. The weekly OBV line does not show a strong rise but it has been moving up gently the past few months.
The weekly Moving Average Convergence Divergence (MACD) oscillator is above the zero line but is crossing to a possible take profits sell signal.
In this Point and Figure chart of CELG, above, we can see a large and developed base pattern that yields a potential upside price target of $155. A trade up to $148 will be positive.
Bottom line: CELG could see some modest weakness in the short run but the weekly chart and the Point and Figure chart suggest higher prices lie ahead. Risk a close below $125.