quantguy
Long

GILD: The Little Engine that Could

NASDAQ:GILD   GILEAD SCIENCES INC
Despite my overall bearish outlook on stocks , Gilead Sciences             stands out as the 'Little Engine that Could' in the sense that it keeps chugging along despite being battered by the broader index just after earnings came out late January. On the fundamental side, most analysts think it's way underweight citing that it should be worth as much as 66% more as per the attached article.

In my personal opinion, the fact that it is largely uncorrelated with the S&P             index (overlaid in red) is actually a good thing. Stocks in general are in a frenzy over more free money from a global quantitative easing, bolstered further by the dovishness of the FOMC meeting consensus released yesterday.

Technically, it appears to be consolidating once more in somewhat of a flag pattern, which is even easier to see when Heikin Ashi charts are applied. Further, it is consolidating at a major fibonacci level (anchored from the high of 2016-01-25 to the strong level of support from the low of 2016-02-19). Yesterday proved very bullish leading us to expect some pullback, but the high of today was still greater than that of Tuesday, another bullish sign.

Note the proximity to the Ichimoku cloud , which may indicate further pressure building at that level. The other technicals such as the MACD , ADX and RSI suggest that we are ranging, though fortunately the Aroon indicator advocates that we are in a longer term uptrend.

Trading idea: Wait for a big bull bar to confirm the breakout from the flag pattern. Set your profit targets using the fibonacci levels above, with a protective stop at the base of the (hypothetical at this point) bull candle. Keep in mind that this may be something you want to hold on to long term.
daburm82
8 months ago
Excellent analysis, you work real hard!
+1 Reply
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