Bio-Rad Laboratories (BIO) was rated a new outperform (buy) by a sell side firm here on Wednesday with a $565 price target. Let's check out the charts and indicators of the maker of life science research and clinical diagnostic products.
In this bar chart of BIO, below, we can see a serious decline in the stock price over the past 12 months. Prices have been cut in half from December to November. Prices just closed back below the 50-day moving average line but have stayed below the declining 200-day moving average line since January. The On-Balance-Volume (OBV) line shows a decline to a low in early November followed by a rise. The trading volume is very heavy in October and early November, suggesting to me that there was a shift in ownership from weak hands to stronger hands. The Moving Average Convergence Divergence (MACD) oscillator has just crossed above the zero line for an outright buy signal.
In this weekly Japanese candlestick chart of BIO, below, we can see a better-looking picture. Prices are still below the declining 40-week moving average line but we can see a bottom reversal pattern in late October. Prices bounced and have held steady around $400. The weekly OBV line has recovered from a dip in October. The 12-week momentum study in the lower panel shows a large bullish divergence from March to October with equal momentum lows when prices made lower lows. This divergence can foreshadow a recovery rally in the months ahead.
In this daily Point and Figure chart of BIO, below, we can see a potential upside price target in the $646 area. A trade at $384.57 could weaken the picture.
In this weekly Point and Figure chart of BIO, below, we can see a target price of $652.
Bottom line strategy: It looks like BIO made a good low in early November, but this nadir probably needs to be retested to convince investors that a bottom is in. In this current weak broad market environment we are probably going to see BIO trade sideways for several weeks or months before a new sustained advance begins. Be patient.
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