Drug maker Novo Nordisk (NVO) is probably known around the world now for its Ozempic and Wegovy drugs to combat obesity. Perhaps there is more interest in weight loss than AI right now. Type in "weight loss" in your favorite search engine and you get about 4,890,000,000 results. Interesting.
Let's check out the charts and indicators of NVO to see how we might trade it.
In the daily bar chart of NVO, below, I can see that the shares have doubled in less than a year's time. NVO traded sideways to easier since April before gapping sharply higher the other morning. NVO trades above the bottoming 50-day moving average line and well above the rising 200-day moving average line.
Trading volume was steady the past year and just "blew off the charts" the past couple of days. The On-Balance-Volume (OBV) line has been moving upwards from late September and tells me that buyers of NVO have been more aggressive than sellers for the past year.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is back above the zero line in buy territory.
In the weekly Japanese candlestick chart of NVO, below, I can see a very positive picture. The shares are in a longer-term advance. NVO went sideways in 2022 when the broader market averages slumped. The slope of the 40-week moving average line is positive.
The weekly OBV is bullish and the MACD oscillator is about to cross to the upside for a fresh outright buy signal.
In this daily Point and Figure chart of NVO, below, I can see that the stock came very close to reaching an upside price target of $195.
In this weekly Point and Figure chart of NVO, below, I can see the same price target as the daily chart above -- $195.
In this second weekly Point and Figure chart of NVO, below, I used a five-box reversal filter, which generates a price target in the $337 area. Maybe.
Bottom-line strategy: A blockbuster drug generates annual sales of $1 billion or more for the company that sells it. Ailments like diabetes, cholesterol, high blood pressure, and cancer are known blockbusters and now we need to focus on the problems of weight loss and Alzheimer's disease.
NVO is likely to trade sideways for several days or maybe even several weeks. This is normal after a big upside move. There is a balance between profit taking and new buying. Short-term traders focus on nailing down profits while longer-term investors assess the odds of further gains.
With the rally in the broader market averages looking more risky than it did back in March, traders looking to go long NVO should wait for a pullback to the $180-$175 area before probing the long side.
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