NovoCure Ltd. (NVCR) is pulling back Monday and the weakness may not be over.
In early November we reviewed the charts of NVCR and wrote that, "If you are still long NVCR from early October then I would continue to hold those positions but raise stop protection to a close below $110 now."
Let's check out the charts and indicators again.
In the updated daily Japanese candlestick chart of NVCR, below, we can see some upper shadows last month telling us that traders were rejecting the highs. The slope of the shorter 50-day moving average line is positive and so is the 200-day line, however, prices got close to twice the level of the 200-day line which is my "guideline" for being extended or overbought.
The On-Balance-Volume (OBV) line has been going sideways the past three months and did not confirm the price gains in December. The Moving Average Convergence Divergence (MACD) oscillator has made a bearish divergence with twin tops in October and December when prices made higher highs.
In this weekly Japanese candlestick chart of NVCR, below, we see some clues that the shares could be vulnerable to a pull back -- there are upper shadows and a possible high-wave candle pattern. The weekly OBV line has not kept up with the price action the past four months telling us that the price action has been much stronger than the volume action -- not a good sign.
The 12-week price momentum study shows lower highs since October telling us that the pace of the rally is slowing.
In this daily Point and Figure chart of NVCR, below, we can see a downside price target in the $154 area.
Bottom-line strategy: Traders who may still be long some shares of NVCR should take profits here or raise stops to $155 from below $110.
