NovoCure (NVCR) shares soared higher today as the company gave an update on a phase 3 trial of a treatment for non-small cell lung cancer.
Let's check out the charts. In our last review on February 26, we were pessimistic and wrote that "Traders still long NVCR should take the money and run to the sidelines. Keep your powder dry for now." Prices weakened into March but managed to find support around $120. NVCR gapped sharply higher today, changing the picture in an instant.
In this daily bar chart of NVCR, below, we can see one of the most impressive upside price gaps I have seen in many years. NVCR gapped above the declining 50-day moving average line and nearly opened at a new all-time high.
One day's price surge won't turn the moving averages, as they lag by definition. The On-Balance-Volume (OBV) line is likely to turn sharply higher and the Moving Average Convergence Divergence (MACD) oscillator is going to make a quick turn higher.
In this updated daily Point and Figure chart of NVCR, below, we see no price gap -- this kind of charting method fills in the price boxes as if there were trades at those levels. The software is now projecting the $389 area as a price objective.
Bottom line strategy: Today's move on NVCR is very dramatic. We are going to need to see a number of trading days of price action to see what level to suggest a purchase -- and more importantly, what level to suggest a sell stop. Exciting move!
