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  1. Home
  2. / Investing
  3. / Stocks

It's as Simple as A-B-C, AmerisourceBergen Has Begun a New Leg Higher

Here's how to play the stock now.
By BRUCE KAMICH
Oct 16, 2019 | 11:58 AM EDT
Stocks quotes in this article: ABC

AmerisourceBergen Corp. (ABC) is trading up strongly Wednesday on the heels of reports of a potential settlement on over 2,000 lawsuits brought by state and local governments over the opioid epidemic. Let's check out the charts of ABC to see if this price strength is sustainable.  

 
In the daily bar chart of ABC, below, we can see that prices had been moving sideways to lower from early August until a few days ago when it started to rally. Prices have surged above the declining 50-day moving average line Wednesday. The daily On-Balance-Volume (OBV) has been improving all month and suggests a shift from aggressive selling to aggressive buying.
 
The trend-following Moving Average Convergence Divergence (MACD) oscillator has just crossed to the upside for a cover shorts buy signal. The indicator is just below the zero line so further price strength in ABC should soon generate a cross of the zero line and an outright buy signal. 

In the weekly bar chart of ABC, below, we can see that prices have been stuck in a sideways trading range the past three years. Prices are above the rising 40-week moving average line.

The weekly OBV line shows improvement from April and the MACD oscillator is above the zero line and narrowing toward a possible fresh buy signal.  

In this Point and Figure chart of ABC, below, we can see Wednesday's strength and an upside price target of $105. A decline to $79.05 would weaken the chart.

Bottom-line strategy: Traders could go long ABC on any intra-day dip or temporary pullback. Risk below $80 and the $102 area is our first price target.

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TAGS: Investing | Stocks | Technical Analysis | Healthcare | Pharmaceuticals

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