GlaxoSmithKline plc ADR (GSK) was mentioned during Jim Cramer's Mad Money program Monday night - as "now a fountain of innovation." Let's check out the charts to see if this innovation is attracting bullish investors and their money.
In this daily bar chart of GSK, below, we can see a choppy sideways trading range for GSK the past year. If you went long at the beginning of 2017 and held until now you basically picked up the dividend. Prices traded up and down and up and down more times than during my EKG at my annual physical in December.
That is the view from 35,000 feet but now look closer at the activity in December. Prices made a brief, sharp move lower in early December but the selloff stopped as quickly as it started. Prices have made higher lows and higher highs the past five weeks.
The daily On-Balance-Volume (OBV) line has turned to the upside signaling that buyers of GSK have turned more aggressive.
In the middle of December we can see that the Moving Average Convergence Divergence (MACD) oscillator crossed to the upside for a cover shorts buy signal.
GSK is now just a few cents below the declining 50-day moving average line and about $1.00 below the still rising 200-day average line.
In this weekly bar chart of GSK, below, we can see a three-year downward sloping channel. Prices are below the declining 40-week moving average line but that is not what I want you to focus on. Imagine what the chart will look like if GSK can make a weekly close above $42. Bullish, right?
The weekly OBV line has declined for about five months but looks ready to turn higher.
The weekly MACD oscillator has narrowed and is close to an upside crossover and not all that far from the zero line. Interesting.
In this Point and Figure chart of GSK, below, we can see a lot of price history. GSK may move slowly but it is on the edge of a major upside breakout. Imagine if GSK makes a weekly trade at $42 - this will be a triple top breakout and open the way for a significant upside move, in my opinion.
Bottom line strategy: Imagine getting a 5% yield as you wait for GSK to rally just $3/share. If you like that idea then go long GSK here and risk a close below $37. Buy more above $42.