Sunday, September 29, 2013

Best Biotechnology & HealthCare Stocks: $GSK, $THRX, $NVS, $AZN

This weeks stocks covered the asthma and COPD market.  My fundamental commentary is available on the Motley Fool, my technical view on these stocks is here:

The stock with the greatest potential to benefit is Theravance ($THRX). The stock is shaping up with a very good base, with excellent consolidation volume following the buying spikes in April and May. The measured move target from the base is $51, but a broader measured move target projected from the April-May rally is up to $62. Technicals are all bullish - be prepared for a volume break of $42 (3 million+ shares) - stops on a loss of $40 with 20-day MA offering a little more room on the downside.


GlaxoSmithKline ($GSK) is not looking so good.  It has spent September struggling to push above converged 20-day and 50-day MAs. It gapped down on Friday leave it vulnerable at triangle support, and it looks ready to break lower in a run to the 200-day MA. The stock turned technically net bearish in the middle of September.  Add to this five significant volume spikes of selling and it's hard to be positive on this in the short term. A solid break of $52 would catch shorts out, so bulls can look to that as a buying opportunity.


In contrast, Novartis ($NVS) is inching higher, albeit without much fanfare. The break above $75 is the brightest spot for the stock, with support (and stop placement) at $75 or loss of 20-day MA.  Hard to know how far it can go: a measured move target is $82, and beyond that probably wouldn't want to get too greedy.


Longs should also find Astrazeneca ($AZN) interesting. This is a stock shaping a 'bull flag' with support at $51.50 and resistance up at $52.50. The stock has benefited from a strong push in September. There is developing weakness in On-Balance-Volume, but other technicals are bullish. Traders have a number of choices depending on their risk tolerance: $51.50, 20-day MA, $50-day MA or $50 are all stop placement areas. There are two measured move targets: $56 for the September 'bull flag', with $58 for the June-September move.


Take you pick Ladies & Gents....

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com.
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