Jim Cramer has a number of investing rules and Rule No. 1 is always go for the easy money, not the hard money. That was Cramer's lesson for his Mad Money viewers Thursday night. Sometimes companies transition from easy-money stocks to hard-money stocks, Cramer explained, and being able to spot the difference is crucial.
The easy money in pharma is Novartis AG (NVS) so let's check out the charts and indicators.
In the daily bar chart of NVS, below, we can see that prices have been in an uptrend the past twelve months. The rising 200-day moving average line has done an excellent job in identifying the uptrend and providing a number of buying opportunities along the way. A dip this week toward the rising 50-day moving average line looks like another buying opportunity.
The On-Balance-Volume (OBV) line just made a new high for the move up to finally confirm the price action. Prices made an upside breakout in late May but the OBV line did not confirm the move until now. The Moving Average Convergence Divergence (MACD) oscillator was in a take profits mode from late June but it is now poised for a turn higher and a buy signal.
In the weekly bar chart of NVS, below, we can see that prices are above the rising 40-week moving average line.
The weekly OBV line has been rising bullishly the past twelve months and the MACD oscillator is still in a bullish configuration.
In this Point and Figure chart of NVS, below, we can see a potential upside price target in the $107 area.
Bottom-line strategy: I don't know if NVS is easy money but I will say it has been in an uptrend that is likely to continue. Risk a close below $88 now with the $105 area the next upside price target.