During Thursday's Lightning Round segment of Mad Money one caller asked about Anavex Life Sciences ( AVXL) . "This is speculative but I think you stick with it," responded Jim Cramer.
According to the company's website they do "research and product development of pharmaceuticals and biologic agents for the prevention and treatment of human neurological and neurodegenerative disorders, pain and cancer." Heady and important work but let's check on the charts and indicators.
In the daily bar chart of AVXL, below, we can see that the shares made a base in the second half of 2020 and then started a strong advance in late January and early February. Prices soared to a very brief $28 high and then quickly corrected lower until the middle of May. A fresh advance got underway and a new high was set once again. Prices are trading above the rising 50-day moving average line. AVXL should be considered extended or overbought as it trades for more than twice the level of the 200-day moving average line which stands around $10.50 or so.
The On-Balance-Volume (OBV) line is positive while the Moving Average Convergence Divergence (MACD) oscillator has just crossed to the downside for a take profit sell signal.
In the weekly Japanese candlestick chart of AVXL, below, we can see a large upper shadow in early February but only a small upper shadow in late June. The most recent candles show us lower shadows and a rejection of the lows. The rising 40-week moving average line is bullish but prices are extended or overbought when compared to this indicator.
The weekly OBV line is bullish and so is the Moving Average Convergence Divergence (MACD) oscillator.
In this daily Point and Figure chart of AVXL, below, we can see a potential upside price target in the $45 area.
This weekly Point and Figure chart of AVXL, below, is generating a potential $72 price target.
Bottom-line strategy: Traders who can afford to risk a close below $20 could go long AVXL on strength above $26 looking for gains to $45 for starters.
