The Implications of Celgene Stock Forging a New All-Time High

CELG stock
Credit:iStock.com/Peshkova

CELG Stock: No Overhead Resistance to Contain the Stock Price from Advancing

In April of this year, I stated that Celgene Corporation (NASDAQ:CELG) stock is by far my favorite stock in the biotech universe, which is not an easy title to attain. The reason why Celgene stock is my favorite is that the stock chart is constructive and the indications it produces are pristine. These are especially important factors given the fact that I generate my views on an investment by analyzing the company’s stock chart.

This method of investment analysis is called technical analysis, and it is based on the notion that historical data can be used to project what the future may bring. This may sound like a far-fetched idea, but investments have a habit of trending, which is the foundation of this method of investment analysis.

For nearly two decades, I have been studying and applying this method of analysis to my investment strategies. This method is not perfect, but when it is applied with the correct risk parameters, the results are simply outstanding.

The reason why I like Celgene stock so much is that it adheres to the rules set out by technical analysis, meaning that this investment acts as expected, which is an endearing characteristic to have.

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The following Celgene stock chart illustrates this investment’s obedience to levels of price support and resistance.

Celgene stock chart

Chart courtesy of StockCharts.com

In April, when I dubbed Celgene my favorite biotech stock in the publication titled “Celgene Stock Is All Set for a Push Towards Higher Prices,” I outlined that in order to confirm the notion of higher stock prices on the horizon, CELG stock needed to break above a key level of price resistance that stood at $127.50.

This is exactly what transpired on June 21, when CELG stock surged by $6.61 to close the day up 5.24%. This event is highlighted as a breakout on the stock chart and it serves to suggest that higher stock prices are on the horizon.

Over the next few weeks, CELG shares staged an advance. But in August, Celgene stock returned to test this previous level of resistance. Returning to test a previous level of resistance is known as a backtest and it serves to reinforce that the breakout was legitimate, while simultaneously establishing a new level of price support.

Once this backtest was complete, the share price staged a powerful advance. CELG stock has just forged a new all-time high, which was altogether not a surprise because the following stock chart was already implying that such a feat was underway.

celg price chart

Chart courtesy of StockCharts.com

This stock chart illustrates a predominant long-term trend, which is bullish, and a momentum indicator that is suggesting that the current path of least resistance is geared towards higher prices. Together, these indications support the notion that higher CELG stock prices are on the horizon.

The predominant long-trend term bullish trend on the Celgene price chart contains a series of higher highs and higher lows, and this characteristic is what I describe as the quintessential characteristic that defines all bullish trends. This bullish trend is effectively captured using a simple uptrend line. This uptrend line is created by connecting the series of higher lows that define this trend.

Using this uptrend line is as simple as it was to create, and as long as Celgene shares are trading above this uptrend line, I can only assume that a bull market is still in development and higher stock prices will prevail. Breaking below this uptrend line would negate all the bullish implications implied by it, suggesting that lower prices are on the horizon.

This uptrend line was tested this summer and investors were eager to support this metric.

The moving average convergence/divergence (MACD) indicator is a momentum indicator that is suggesting that the path of least resistance is geared towards higher stock prices. MACD is a momentum indicator used to distinguish between bearish and bullish momentum, and the bullish cross that was generated earlier this year is indicating that bullish momentum is influencing the trading action in CELG stock.

While this investment was testing the uptrend line, the MACD indicator was in danger of creating a bearish cross. This investment’s inability to break below the uptrend line, as well as its inability to generate a bearish MACD cross, is a testament to its inherent strength. Therefore, the new all-time high that was just created should come as no surprise.

Analyst Take: 

Celgene stock just created a new all-time high, which opens the door to much higher stock prices because there is absolutely no overhead resistance to contain the price from advancing. This bullish posturing is being supported by a number of bullish indications, and given CELG stock’s adherence to the rules set out by technical analysis, I expect much higher prices to follow.