During Thursday's Mad Money Lightning Round segment host Jim Cramer fielded questions about stocks from various callers. One caller asked Cramer about Dynavax Technologies (DVAX) . "It's good. I love these little drug stories," responded Cramer.
Let's check out the charts of this biopharmaceutical company that develops and commercializes novel vaccines.
In the daily bar chart of DVAX, below, we can see two base patterns that have supported the rally so far. On the far left hand side of the chart is a sideways pattern around $4 followed by a breakout and rally to the $10 area. For six months DVAX trades around the $10 area and then breaks out for a rally to $20. Prices are trading above the rising 50-day moving average line and the rising 200-day line.
It is hard to see what the trading volume has been doing on this chart but the On-Balance-Volume (OBV) line has moved in a positive direction and confirms and supports the price gains this year. The Moving Average Convergence Divergence (MACD) oscillator is crossing to the upside for a fresh outright buy signal.
In the weekly Japanese candlestick chart of DVAX, below, we can see that the shares made a three-year saucer-like base pattern. Students of technical analysis may want to read my book on chart patterns which are still working after 110 years. Prices bottomed out in the $4-$2 area but the "neckline" around $12 is interesting and hard to miss. This large base pattern can support further gains in the months ahead, I believe. The rising 40-week moving average line tells us that math is on our side.
The rising OBV line from the middle of the base is just what the doctor ordered -- more traders are getting involved and buyers are more aggressive. The MACD oscillator has been above the zero line all year.
In this daily Point and Figure chart of DVAX, below, we can see that the software is projecting a potential price target in the $32 area.
In this fourth chart we used weekly price data and a five-box reversal filter. This Point and Figure chart yields a price target of $70. Not bad! A trade at $25 is a another major breakout on this chart.
Bottom-line strategy: Aggressive traders could go long DVAX as close to $18 as possible and then risk to $13. The $32 area is our first price target and the $70 is our long-term objective.
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