The big pharma stocks used to represent a safe haven trade when the broad stock market turned weak, TheStreet's Jim Cramer told viewers of "Mad Money" Thursday night. That old guideline is no longer true. While many drug stocks rallied Thursday, that rally may be short-lived, Cramer noted.
Cramer said he used to be a big fan of Allergan (AGN) , but even after a beat-and-raise quarter, analysts are still questioning whether CEO Brent Saunders is bringing out value fast enough.
Let's check the charts and technical indicators for some guidance.
In this daily bar chart of AGN, below, we can see that prices have been in a wide sideways pattern the past 12 months. The 200-day moving average line has started to turn lower again and the 50-day moving average line is bearish.
The daily On-Balance-Volume (OBV) line shows a slight rise from March to late August and then weakness. Overall the OBV line is not supporting a positive outlook for the months ahead.
The Moving Average Convergence Divergence (MACD) oscillator recently crossed below the zero line for an outright sell signal.
In this weekly bar chart of AGN, below, we can see a long bearish trend of lower lows and lower highs. Prices have so far held the lows of early 2018 (March and May), but that may not last. Prices are below the cresting 40-week moving average line.
The weekly OBV line has turned lower the past two months and the MACD oscillator has crossed to the downside for a take profits sell signal.
In this long-term Point and Figure chart of AGN, below, we can see that prices have reached a price target but there is no signs of new accumulation or buying. Prices could rebase in the $150-$140 area but we will have to see what develops.
Bottom line strategy: AGN could see a $180-$140 trading range in the weeks ahead. Bases are long repair processes and AGN will probably not be an exception.