The "Lightning Round" segment of Mad Money is a viewer favorite. Callers get the opportunity to ask Jim Cramer about stocks they are interested in. Monday night one caller asked about Vertex Pharmaceuticals (VRTX) : "You want to buy Vertex. This one is getting better and better," said Cramer.
Let's check out the charts.
In this daily bar chart of VRTX, below, we can see that prices rallied into July and stalled out before pulling back this month. Prices broke below the 50-day moving average line and the slope of the line has turned negative. VRTX is still above the rising 200-day moving average line which intersects down below $250 now. The trading volume has been active since March but has been slowly decreasing.
The On-Balance-Volume (OBV) line shows a peak in early June and a slow descent into August telling us that sellers of VRTX have been more aggressive.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell territory but this indicator is getting close to an upside crossover for a cover shorts buy signal.
In this weekly bar chart of VRTX, below, we can see that prices made a large sideways consolidation pattern in 2018 and 2019. Prices broke out on the upside in late 2019 and we can see a pretty good mark-up rally. VRTX is above the rising 40-week moving average line.
The weekly OBV line has been rising the past three years which is very bullish, but we can see that the line has leveled off a little since July telling us that aggressive buyers are taking a short pause.
The weekly MACD oscillator has turned down in a take profits sell signal.
In this Point and Figure chart of VRTX, below, we used weekly close only price data. Here the software is projecting a potential longer-term price target in the $392 area.
Bottom line strategy: The short-term charts of VRTX suggest that this stock can see further sideways to lower price action in the weeks ahead. Eventually the selling pressure should run its course and we should see the start of renewed buying and a rising OBV line.
Investors who like VRTX should wait for the OBV line to bottom and begin climbing again before probing the long side. Our weekly Point and Figure chart suggests that VRTX could rally close to $400 in the months ahead.
