CORT Stock: The Path of Least Resistance Is Toward Higher Prices
2018 has started off on the right foot and equities are making headway, continuing the trend that characterized all of last year. I have a tendency to believe that biotechnology stocks are going to outperform this year and it is one of the reasons why I am focusing on Corcept Therapeutics Incorporated (NASDAQ:CORT) stock, but it is not the main reason.
The main reason why I am focusing on Corcept Therapeutics stock is that I find its stock chart very compelling, and as a result, I believe that higher CORT stock prices are on the horizon.
Analyzing a company’s stock chart is a method of investment analysis called technical analysis. I have spent the better part of two decades studying and applying this method.
The following stock chart illustrates the developments currently suggesting that higher CORT stock prices are likely to follow.
Chart courtesy of StockCharts.com
This stock chart illustrates that since early October, the stock price has been trading within the confines of a consolidation channel. Consolidation channels within an uptrend are counter-trend moves where overbought conditions are unwound so another advancing leg can follow.
This pattern is captured using two downward-sloping parallel lines, which define levels of price support and price resistance. The share price will oscillate between these two trend lines until either support or resistance is broken.
On January 9, CORT stock broke out above price resistance, and this feat suggests that the consolidation channel is complete. Therefore, higher stock prices are likely to follow.
This breakout is being reinforced by the moving average convergence/divergence (MACD) indicator located in the lower panel.
MACD is an effective trend-following momentum indicator that uses the crossing of a signal line to distinguish whether bullish or bearish momentum is influencing the price action in a stock. This information is both pertinent and important because, without the applicable momentum, a sustained move in the stock price is unlikely.
While the consolidation channel was in development, the MACD signal line was in bearish alignment, correctly implying that bearish momentum was creating a path of least resistance geared toward lower prices. This all changed on December 21, when Corcept Therapeutics stock gapped higher and a bullish MACD cross was generated in the process.
Since that date, higher prices have prevailed, the consolidation channel was completed, and the MACD indicator remains in bullish alignment, supporting the notion that further gains are on the horizon.
These indications come within the context of a much larger bullish trend, which is highlighted on the following Corcept Therapeutics stock chart.
Chart courtesy of StockCharts.com
This stock chart clearly illustrates a bullish trend that spans from the lower left of price chart to the upper right. It contains the quintessential characteristic that defines all bullish trends, which is a series of higher highs and higher lows.
This bullish trend is well-defined and orderly. It is effectively captured using two upward-sloping parallel trend lines that create an ascending channel. These trend lines act as levels of price support and price resistance. As long as the CORT stock price is oscillating in between them, the bullish trend toward higher prices is intact, and over time, higher prices will prevail.
Based on the price action within the channel, I can only assume that resistance outlined by the channel is going to be tested, and that level currently resides just north of $25.00.
I am bullish on Corcept Therapeutics stock because the indications on the company’s stock chart are suggesting that higher CORT stock prices are likely to prevail. This bullish view was generated using technical analysis and I will maintain this view until there indications suggesting that another view is warranted.