Regeneron Pharmaceuticals Inc: 40%+ Returns if REGN Stock Does THIS

 REGN StockREGN Stock: Resumption of the Bull

Biotech stocks are one of my favorite sectors because, after living through a number of bull markets, I have learned that the best performing stocks in a bull market are the ones with the highest beta. Beta measures a stock’s sensitivity to moves in the overall market. High beta stocks move more than the general market and are a staple characteristic of the biotech sector.

I am bullish on Regeneron Pharmaceuticals Inc (NASDAQ:REGN) stock, and it’s not because I am a huge fan of biotech stocks; well maybe a little bit but, rest assured, my opinions are strictly based on the price chart.

I use price charts to discern trends, as it is my belief that being on the right side of a trade is the most important aspect with regard to a profitable trading strategy aside from managing risk.  I chose to focus on REGN stock because the price chart is very constructive, and multiple bullish signals are in development that will help propel the share price higher.

The following chart illustrates the main bullish trend in Regeneron stock.

regn

Chart courtesy of StockCharts.com

Trend lines are the most important tool that I contain in my toolbox. Trend lines help me distinguish patterns, as well as trends. Regeneron stock bottomed in 2009, and the trend can be easily identified using a trend line. This line is created by connecting the troughs on the price chart. An uptrend is defined by higher highs and is confirmed by higher lows. It can easily be identified as the price moves from the lower left to the upper right. There should no mistaking an uptrend from a downtrend.  As long as REGN stock remains above this trend line, my overall bias will remain bullish.

The following chart illustrates key developments in Regeneron stock.

regn3

Chart courtesy of StockCharts.com

The $440.00 price has caused trouble for REGN stock, as it has turned away prices on more than one occasion. This level must be broken to the upside for REGN stock to resume its trend toward higher prices. This level marked an area of support prior to it being broken in January of this year. As is always the case, when a level of price support is finally broken, it becomes a level of resistance. If Regeneron stock can muster enough bullish momentum, a break above this resistance level will open the door for Regeneron stock to retest the all-time high. This event will represent a return of 40%.

There are two moving averages that are beginning to converge. If these moving averages manage to cross, a golden cross will execute. A golden cross is a bullish signal that is produced when a 50-day moving average, highlighted in blue, crosses above a 200-day moving average, highlighted in red. This signal would create the required bullish tailwind needed to break above the resistance level at $440.0

There are numerous other indicators lining up in a similar bullish manner and the following REGN stock chart illustrates.

regn2

Chart courtesy of StockCharts.com

There are two distinct bullish signals that are occurring at the same time on the chart above. These signals increase the odds that the level of resistance at $440.00 will be broken.

The first bullish indication is coming from the lower panel marked “MACD.” Moving Average Convergence Divergence (MACD) is a simple and effective trend-following momentum indicator. Signal line crossings are used to distinguish between bullish and bearish signals. This signal has just crossed in a bullish manner, signalling that the bulls are now in control and the momentum can drive prices higher.

The second bullish indication comes from the price action. An impulse wave highlighted in green is followed up by a consolidation wave highlighted in purple. Healthy bullish charts are littered with such price action.

A new impulse wave is now in development, as the consolidation wave is now complete after the price broke out above the channel that defined this wave. This new impulse wave has a target price that is north of $440.00 and is another reason that supports a break above resistance.

The Bottom Line on Regeneron Stock

I am bullish on REGN stock and believe that the current level of resistance at $440.00 will fall in short order. I believe this will open the door for a test of the previous high, and perhaps higher prices. If my opinion comes to fruition, this will represent a 40%+ return in Regeneron stock. I will remain bullish until the charts give me reason to be otherwise.