Seattle Genetics (SGEN) has reached and passed one of our price targets from our May 4 review. We wrote that "the business of finding blockbuster cancer drugs can be feast or famine but it looks like SGEN is doing it right. Trade SGEN from the long side risking a close below $135 for now. We have price targets from $180 on up to $286."
SGEN touched $200 today so let's check the charts again.
In this updated daily bar chart of SGEN, below, we can see that prices corrected lower from late July into early September. By mid-month prices gapped to the upside and kept climbing. SGEN is well above the rising 50-day moving average line as well as the rising 200-day moving average line. In early September SGEN got close to the 200-day line - not a real test like back in March - and this might be viewed in hindsight as a buying opportunity.
The On-Balance-Volume (OBV) line looks like it just made a new high to confirm the price gains. The Moving Average Convergence Divergence (MACD) oscillator is in a strong buy alignment.
In this weekly Japanese candlestick chart of SGEN, below, we can see a bullish picture. No upper shadows telling us that traders are rejecting the highs. A rising 40-week moving average line.
A bullish OBV line and the MACD oscillator is crossing to the upside for a fresh outright buy signal. Prices could hesitate a bit around $210 which would be a three-fold increase from the base around $70. This might be an area to consider doing some profit taking.
In this updated daily Point and Figure chart of SGEN, below, we can see a potential price target of $259.
Bottom line strategy: The charts and indicators are looking healthy. Maintain long positions but raise sell stop protection to a close below $180 from a close below $135. Some profit taking around $210 wouldn't hurt.
(Seattle Genetics is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells SGEN? Learn more now.)
