I have no idea who will win the global race for a successful Alzheimer's drug but for the moment, at least, it looks like Biogen (BIIB) has the spotlight and the shares are higher in early trading Wednesday.
Let's check out the charts to see how traders could react to the latest news.
In the daily bar chart of BIIB, below, we can see an impressive bottom pattern from February to the end of September when the shares gapped higher -- up and out of the base. BIIB is trading above the rising 50-day moving average line and above the positively sloped 200-day moving average line.
Trading volume has picked up in the past three months to help confirm the price gains. The math-driven On-Balance-Volume (OBV) line shows a rising pattern from June telling us that buyers of the stock have been more aggressive than sellers. Yes, the OBV line can lead prices!
The Moving Average Convergence Divergence (MACD) oscillator is above the zero line but in a correction mode.
In the weekly Japanese candlestick chart of BIIB, below, we see a positive-looking picture. The shares are pointed up and trade above the rising 40-week moving average line.
The weekly OBV line shows a positive trend for the past two years. The MACD oscillator is in a very bullish alignment above the zero line.
In this daily Point and Figure chart of BIIB, below, we don't have the pre-market price action plotted but the chart still shows us a price target in the $449 area.
In this second Point and Figure chart of BIIB, below, we see the same $449 price target.
Bottom-line strategy: In
our September 28 review of BIIB's charts we wrote that "Traders looking to go long BIIB should wait for several days of sideways price action before probing the long side." Traders should have been able to go long around the $260 area. Existing longs should risk to $275. Traders looking to go long BIIB should be a buyer around $300 risking to $275.
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