In his "Homework" segment of "Mad Money" last Friday, Jim Cramer followed up on a few stocks that had stumped him during earlier shows. Cramer recommended Regeneron Pharmaceuticals Inc. (REGN) as his favorite eye care stock. Let's take a look.
In this daily bar chart of REGN, below, we can see that prices rallied with the broad market from early October to around the middle of January. Prices have turned lower to break nearby support around $350 and to close below the rising 50-day moving average line. The daily On-Balance-Volume (OBV) line has turned lower and the Moving Average Convergence Divergence (MACD) oscillator is close to crossing the zero line after being in a take profits mode since early December.
In this weekly bar chart of REGN, below, we can see that prices looked headed down to the 40-week moving average line, which is bottoming. The weekly OBV line looks like it made a small double top in December and January and the MACD oscillator has been narrowing toward a possible take profits sell signal.
In this daily Point and Figure chart of REGN, below, we can see that the software has projected a potential or possible downside price target in the $290 area. The volume-by-price bars (left scale) show good support beginning around $318.
Bottom line strategy: REGN could fall further with the weakness in the broad market. Without a large distribution pattern on the chart I suggest that near-term price weakness is likely to be a buying opportunity. Wait for a candlestick reversal pattern before going long.