Jazz Pharmaceuticals Ltd. (JAZZ) was cut to a "neutral" rating by Goldman Sachs, with a price target of $196. In our last review of JAZZ back on May 14 we wrote that "Traders could go long JAZZ at current levels and on strength above $180. Risk to $169 for now. Our price targets going forward are $216, $244 and then $260." Traders would have been stopped out for a loss by late July.
Let's check the charts again.
In this daily bar chart of JAZZ, below, we can see that prices sank to a low in late October/early November. Prices recovered into January followed by a correction and then another "leg" higher. JAZZ is back to the underside of the May-July top pattern and this is likely to be an area of resistance as there may be some old longs from that zone who are looking to "get even". Prices are trading above the rising 50-day moving average line and above the bottoming 200-day line.
The On-Balance-Volume (OBV) showed some improvement in December and into January but has since declined. A weak OBV line is a sign that sellers are being more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator is above the zero line but crossed to the downside in March for a take profit sell signal.
In this weekly Japanese candlestick chart of JAZZ, below, we can see a couple upper shadows in March as traders rejected the upside. Prices are above the 40-week moving average line but the slope of the line is still bearish.
The OBV line rose from September but looks like it stalled in March. The MACD oscillator is in a bullish alignment above the zero line.
In this daily Point and Figure chart of JAZZ, below, we can see a potential upside price target of $211.
In this weekly Point and Figure chart of JAZZ, below, we see the same $211 price target as the daily chart. A trade at $154 is likely to weaken this chart.
Bottom line strategy: The charts and indicators of JAZZ are not all that robust. Prices could creep higher but weakness in the broad market averages is likely to negatively impact shares of JAZZ. Avoid the long side.
