Gilead Sciences, A Technical Look At A Biotechnology Stock

Gilead Sciences (GILD) has come on my radar now from two sources that find the stock fundamentally sound and management great.  After looking at this myself a little deeper I am ready for some technical analysis on it.  I'm usually careful with pharmaceuticals and biotechnology stocks simply due to the FDA approval/non-approval risk but if enough items line up even this sector should lend itself well for an educated try with probabilities in our favor.  

To the charts we go;

The weekly chart shows resistance at the downward-sloping trend line (blue dotted line) that currrently comes in around $42.50.  Not far above is the 200 week moving average at $44.  So, from a weekly perspective, should GILD be able to overcome those two points of resistance it should have fairly smooth sailing to around $49.

The daily chart looks even clearer.  Note the blue zone, which is a still unfilled gap from all the way back from April 2010. The gap fill would complete at $44.75, which…maybe coincidentally or not, is a -23.6% Fibonacci extension if you measure the move from the December 2010 lows to the highs in April 2011.  All in all, this is a good trade setup for a long-side try.

Stops depend on ones risk profile, but we are looking at $40 and target 1 at $43, target 2 $45ish, and target 3 as high as $49.

Happy Trading


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