Pacific Biosciences Reaches Our Price Target: Now What?

Let's check out the charts and technical indicators.

"This is another great stock," Jim Cramer told viewers of the Lightning Round segment of Mad Money Tuesday evening when asked about Pacific Biosciences of California Inc. (PACB) . The company provides sophisticated genomic analysis systems and according to the company's website they have developed a Single Molecule, Real-Time Sequencing technology.

This is above my pay grade so let's check out the charts and technical indicators. 

We looked at the charts of PACB on Dec. 9 and wrote that, "Maybe in 2021 PACB goes on to rally to $39 but in the here and now when a stock is trading at three times its 200-day moving average line it is a clear message that prices are overbought/extended. Buyer beware!"

In the daily Japanese candlestick chart of PACB, below, we can see that the shares corrected modestly after our Dec. 9 review and subsequently rallied to the $39 price target. Now what?

This chart shows that prices are above the rising 50-day moving average line and trade at more than three times the level of the rising 200-day moving average line. PACB is more extended (overbought) than back in early December.

Trading volume has been active the past four months and could be telling us that older longs are selling to newer buyers or a transfer from strong hands to weaker hands. The On-Balance-Volume (OBV) line is pointed up and tells us that on the surface buyers are still more aggressive.

The Moving Average Convergence Divergence (MACD) oscillator is pointed up but could cross to the downside soon for a take profit sell signal. 

 

In the weekly Japanese candlestick chart of PACB, below, we can see that prices are up more than 10-fold from their 2020 lows. Fantastic returns! PACB is above the rising 40-week moving average line but extended.

 

The weekly OBV line is pointed up and the MACD oscillator is bullish.  

 

 

 

In this daily Point and Figure chart of PACB, below, we can see a potential price target of $48. We can also see that a decline below $32 is likely to weaken the picture. 

 

 

 

Bottom-line strategy: What should you do when a stock you own is trading at 3-1/2-times the level of the 200-day moving average line? The late Joseph Granville would probably tell you to take profits.

 

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