In an exclusive "Executive Decision" segment of "Mad Money" on CNBC, Jim Cramer spoke with Justin Gover, CEO of GW Pharmaceuticals (GWPH) . GWPH has rallied up 30% for the year, including 7% Thursday on news that both the FDA and DEA will allow the company to sell its epilepsy drug in the U.S.
Gover said GWPH has worked for 20 years on this drug and Thursday was a big milestone for their company. They hope their drug will have a meaningful impact on the lives of their patients. Gover explained that the FDA sets a very high bar when it comes to the safety and efficacy of the drugs they approve.
GWPH is working on additional indications for their current drugs and that studies in place to treat autism, pain and oncology. Sounds like a potentially great pipeline but let's check out the charts.
In this daily bar chart of GWPH, below, we can see prices moving higher but within a wide trading range. Using moving averages for signals would have been frustrating even using the slower-to-react 200-day moving average line. Since early April prices have made higher lows and higher highs - the simple definition of an uptrend.
The daily On-Balance-Volume (OBV) line has roughly tracked the market higher and made a new high in September to confirm the new price highs.
The Moving Average Convergence Divergence (MACD) oscillator is crossing to the upside for a cover shorts buy signal.
In this weekly bar chart of GWPH, below, we can see that prices have advanced significantly the past three years. Trading in the direction of the rising 40-week moving average line would have been a successful strategy.
The weekly OBV line has indicated that buyers of GWPH have been more aggressive and the MACD oscillator has been above the zero line the past year.
In this Point and Figure chart of GWPH, below, we can see an upside price objective of $184.16 being projected.
Bottom line strategy: Investors need to risk a close below $130 to trade GWPH from the long side. Go long above $150 looking for gains to $185 and then $200.