Intellia Therapeutics (NTLA) is involved in the development of CRISPR/Cas9 genome editing and is rapidly moving experimental therapies toward the clinic. It's real cutting-edge stuff and a sell side firm started fundamental coverage of the stock with an overweight rating (buy). Unfortunately, Intellia's charts tell me a different story. Let's check.
In this daily bar chart of NTLA, below, we can see that prices slumped from November to lows in May/June. We can see a recovery rally into early August that has fizzled. Prices are weakening again and trade below the declining 50-day moving average line and below the declining 200-day line. The On-Balance-Volume (OBV) line has been weak since early August and is foreshadowing lower prices ahead. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of NTLA, below, we see a mixed picture. Prices are in a longer-term downward trend as they trade below the negatively sloped 40-week moving average line. We can see upper shadows at the underside of the 40-week line, telling us that traders have been rejecting the highs as prices approach the underside of the line. The weekly OBV line is pointed up while prices have rolled over and this a problem -- traders are being more aggressive buyers but prices are struggling. The end result is probably going to be lower prices in the weeks ahead. The MACD oscillator is bearish and narrowing as the trend strength is weakening.
In this daily Point and Figure chart of NTLA, below, we can see a potential downside price target in the $46 area.
In this weekly Point and Figure chart of NTLA, below, we can see a price target in the $37 area.
Bottom line strategy: Intellia Therapeutics is doing transformational work but the charts of NTLA are poised to weaken. Avoid the long side of NTLA.
