Shares of NovoCure ( NVCR) gapped sharply higher Thursday as traders reacted to news of NovoCure and Zai Lab ( ZLAB) announcing that a lung cancer therapy they are developing met its main goal in a late-stage trial.
Let's check out the charts and indicators of both NovoCure and Zai Lab.
NovoCure
In the daily bar chart of NVCR, below, I can see a huge upside price gap with Thursday's price action. The shares have gapped above all the highs of 2022. Impressive. Prices have gapped above the 50-day and the 200-day moving average lines. The trading volume is heavy so far Thursday.
The On-Balance-Volume (OBV) line shows a rise from June telling me that buyers of NVCR have been more aggressive for several months leading up Thursday's gap. The Moving Average Convergence Divergence (MACD) looks like it will cross above the zero line today for an outright buy signal.
In the weekly Japanese candlestick chart of NVCR, below, we don't have Thursday's price action plotted so we have to use our imagination. The shares are trading well above the trading range of the past year. Prices are above the bottoming 40-week moving average line.
The weekly OBV line has been in a downward trend from the middle of 2021. The MACD oscillator is just slightly below the zero line.
In this daily Point and Figure chart of NVCR, below, we can see Thursday's rally with the gap filled in and a potential price target in the $188 area.
In the weekly Point and Figure chart of NVCR, below, the software is still generating a downside price target. A trade at $91 or higher this Friday (a weekly chart) should turn the chart bullish.
Zai Lab
Meanwhile, shares of Zai Lab ( ZLAB) also gapped higher Thursday but prices have not broken out over the highs of September.
Bottom-line strategy: Investors seem pretty excited about this news but the question for me is where can I go long NVCR and what should I risk? As a technical analyst, I need to see more price action before making a recommendation. Prices could trade sideways or correct lower giving us an opportunity to go long with an appropriate stop loss order. Stay tuned.
