Celgene Stock Has Now Reached That Moment of Truth

Celgene stockCELG Stock: Bullish Expectations

I have been watching Celgene Corporation (NASDAQ:CELG) stock for quite some time, waiting upon an indication that will suggest that this investment is set to advance. CELG stock is now approaching a key level of price support, and in order to sustain the possibility of a bullish move towards higher prices, Celgene stock needs to maintain its stature above this level. I have the inclination to believe a bullish move is approaching because there are numerous indications on the company’s stock chart that are in bullish alignment, supporting such an outcome.

Celgene stock has been lagging behind the market indices simply because it is a biotech stock. This sector, as a whole, has been lagging due to allegations of predatory pricing strategies that have taken center stage in politics and media outlets. I have yet to see a significant rally in the Nasdaq index, where this sector has not outperformed, let alone lagged. The biotech sector is known for its high beta and extreme levels of price performance. I firmly believe that the next leg of this powerful bull market will include the biotech sector as a participant playing catch-up.

The significant level of price support that I am referring to is the uptrend line, highlighted on the CELG stock chart below.

My bullish beliefs are centered around Celgene stock’s ability to remain in bullish alignment, while maintaining its stature above a significant level of price support. The following stock chart illustrates these factors.

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celg stock chart

Chart courtesy of StockCharts.com

This uptrend line is created using a long-term stock chart. This stock chart illustrates a bullish trend that began in 2003 and was tested in 2012, 2016, and is now being tested once again. This uptrend line is what I described as a dividing line that separates investments in bull markets from investments in bear markets. As long as CELG shares are trading above this uptrend line, I can safely say that the overall bullish posture in this biotech stock is still intact, and therefore higher prices can be expected to follow.

If Celgene’s share price ever closed below this uptrend line, which has been in development for 14 years, I would have all the reason I need to believe that the bull market advance that began in 2004 has finally concluded.

Celgene shares are still trading above this uptrend line and this is why I have been looking for an advance to commence. This bullish view is being reinforced by the moving average convergence/divergence (MACD) indicator highlighted in pink in the lower panel of the chart above.

MACD is a momentum indicator that distinguishes between bullish and bearish momentum. A bullish MACD cross serves to suggest that bullish momentum is influencing the trading action, while a bearish MACD cross suggests that bearish momentum is influencing the trading action. A bullish MACD cross was generated earlier this year, suggesting that bullish momentum is creating a path of least resistance that is geared towards higher prices.

These two indications have reinforced my inclination to believe that an advance is set to take place, and the following Celgene stock chart illustrates a trigger that will likely set this advance in motion.

CELG price chart

Chart courtesy of StockCharts.com

This CELG stock chart contains constructive price action. Constructive price action contains the quintessential ingredient to create a suitable trend: an alternating two-wave structure.

This structure consists of an impulse wave that serves to advance the stock price in a swift linear motion, and a consolidation wave that serves to create the necessary environment for a new impulse wave to develop. The current consolidation wave that is in development is unwinding the overbought conditions that were created when the stock price staged an advance that began in October of last year.

This consolidation wave just finished testing the 200-day moving average from above. The 200-day moving average acts a dividing line, much like the uptrend line, and it serves to separate investments trading in bull markets from those trading in bear markets. Like the uptrend line, a stock trading above this moving average is bullish, and one trading below it is bearish. It just so happens that the 200-day moving average and the uptrend line are converging at one price point. This convergence serves to reinforce the notion that the current level of price support is indeed significant.

If a move towards higher prices is set to occur, it will happen with the completion of the current consolidation wave. This completion of this wave will be confirmed when CELG stock crosses and closes above $127.50. This will act as an indication that a new impulse wave is set to develop, which will confirm my beliefs that an advance is set to take hold.

Bottom Line on Celgene Stock

CELG stock is in bullish alignment, suggesting that an advance is set to take place. This advance is predicated on Celgene stock’s ability to remain above a very significant level of price support. My inclination is to believe that this level of support will hold, and that an advance is only moments away from developing.