We checked out the charts of Emergent Biosolutions on March 4 and concluded that "Despite the positive fundamental story EBS looks like it will retest the December/January lows. A break of the support around $80 will likely precipitate further declines. Sell any remaining longs."
In this daily bar chart of EBS, below, we can see that prices sank into early March and then quietly drifted higher until this past Thursday when prices fell sharply and closed weak near the low of the day.
The slope of the 50-day moving average line turned bearish during the past month and the On-Balance-Volume (OBV) line was weak and the Moving Average Convergence Divergence (MACD) oscillator has been in negative territory below the zero line all month.
In this weekly Japanese candlestick chart of EBS, below, we see a bearish picture. Prices are below the cresting 40-week moving average line. Last week's candle was a large red bar meaning that the opening for the week turned out to be the high and the closing was the low of the week. Bearish traders were in charge of the action and were aggressive sellers.
The weekly OBV line is pointed lower and so is the MACD oscillator.
In this daily Point and Figure chart of EBS, below, we can see the recent sharp move lower. The software is projecting the $66 area as a potential price objective.
Bottom line strategy: EBS looks like it will weaken further in the days and weeks ahead. Continue to avoid the long side.
