Regeneron Pharmaceuticals (REGN) is a biotechnology company whose drugs have helped countless people. The stock has soared to new heights recently but some bearish divergences have my attention.
In this daily bar chart of REGN, below, we can see that prices made a large equilateral triangle formation and broke out on the upside in early March. Sometimes we see that prices will make a high when prices would have reached the apex of a bullish triangle. This is a technique I go into in my book on Chart Patterns. I learned about it in 1974 from Ralph Acampora in a class at the New York Institute of Finance.
Trading volume has not been particularly strong the past six weeks as prices rallied to new highs. This is not a good sign for old-time chart readers who like to see volume expand in the direction of the trend. The On-Balance-Volume (OBV) line has risen but the 12-day price momentum study shows a lower high from March to April even as prices made a higher high. This is a bearish divergence. It is not a big divergence but in this weak market environment I would not ignore it.
In this weekly Japanese candlestick chart of REGN, below, we have a mixed picture. Prices are in a longer-term uptrend above the rising 40-week moving average line. The weekly OBV line is pointed up but the 12-week price momentum study shows a bearish divergence from August to March. The current candle could be a bearish hanging man pattern.
In this daily Point and Figure chart of REGN, below, we can see a potential upside price target of $852 but a trade at $705.63 could weaken the picture.
In this weekly Point and Figure chart of REGN, below, we can see that prices reached an upside price target of $718.
Bottom line strategy: Traders who followed our December 9 recommendation -- "Aggressive traders could go long REGN at current levels or on strength above $690. Risk to $615 for now. Our price targets start at $749" should either raise stops to $705 from $615 or take profits here.
