Immunomedics Stock Is Up 31.73% in 5 Weeks with More to Come
IMMU Stock: The Path of Least Resistance Is Geared Towards Higher Stock Prices
On August 23, 2017, I focused on Immunomedics, Inc. (NASDAQ: IMMU) stock in a publication titled “Immunomedics Stock Has Its Sights Set on Higher Prices” when it was trading at $9.55. I am ecstatic to update that publication because five weeks later, this investment is trading at $12.58, which represents a 31.73% return. Capturing this exceptional return was not sheer luck, and I attribute these results to the method of analysis I use to generate a view on a potential investment.
This method is known as technical analysis and it is predicated on the notion that stocks have embedded trends and, therefore, historical data points can be used to forecast what the future may bring.
I have reason to believe that this exceptional move towards higher prices still has further room to run. This inclination is based on an indication that has just been generated on the stock chart. Luckily, IMMU stock is obedient when it comes to technical indications.
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The following long-term Immunomedics stock chart illustrates the developments that were instrumental in suggesting that much higher stock prices were on the horizon.
Chart courtesy of StockCharts.com
This stock chart presents a compelling picture illustrating that in May of this year, IMMU stock was finally able to break above a significant level of horizontal resistance that was preventing the stock price from advancing. This horizontal level of price resistance, which is highlighted on the stock chart, was created by connecting the significant peaks on the stock chart that occurred in 2009 and in 2013.
This level of resistance, which stood at $7.30, is now a new level of price support. Technical analysis states that when a significant level of resistance is broken, it becomes a new level of price support.
Breaking above resistance marks the breakout, and returning to test this level from above marks the backtest. This price action established that the break above resistance was legitimate while simultaneously establishing it as a new level of price support.
Once this feat was accomplished, Immunomedics stock price staged an impressive move towards higher stock prices.
This epic move towards higher stock prices has been supported by a number of metrics that are highlighted on the following Immunomedics stock chart.
Chart courtesy of StockCharts.com
This IMMU stock chart highlights a trend containing a series of higher highs and higher lows, which is the textbook definition of a bullish trend.
This bullish trend is captured using an uptrend line, which was created by connecting the series of higher lows. The number of times this uptrend line has been tested is a testament to its significance, and it is safe to assume that as long as IMMU stock is trading above the uptrend line, then the bullish trend that began in November 2016 is still intact and therefore, in true bull market fashion, higher prices are on the horizon.
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If Immunomedics stock happens to close below this uptrend line, I will have all the reason I need to believe that the bullish trend that began in November 2016 has finally concluded.
Every time this uptrend line has been tested, the stock has bounced. This bounce has been accompanied by a bullish MACD cross. MACD is an acronym for moving average convergence/divergence, and this indicator is used to determine whether bullish or bearish momentum is influencing the stock price.
This is a powerful indicator and the latest bullish MACD cross occurred after the successful backtest. The surge towards higher prices was fueled by bullish momentum, which created the path of least resistance that was geared towards higher prices.
The price action creating this surge in price has been constructive in nature, and therefore, it is suggesting that higher stock prices are on the horizon.
The following Immunomedics stock chart highlights the constructive price action that has developed following the break above resistance.
Chart courtesy of StockCharts.com
Constructive price action consists of an alternating wave structure that contains impulse waves and consolidation waves.
Impulse waves define the period in a bullish trend where the stock price stages a bullish advance.
Consolidation waves define the period in a bullish trend where overbought conditions stemming from the preceding impulse wave are alleviated in order to set the stage for a new impulse wave to develop.
These waves feed off each other and are an essential ingredient in a sustainable trend.
On September 25, IMMU stock completed the consolidation wave by exiting it in an upward direction. The completed consolidation wave suggests that a new impulse wave is now in development.
Aside from suggesting that higher stock prices are on the horizon, this wave structure can be used to generate a price objective for the impulse wave that is now in development. The theory behind this wave structure is that the consolidation wave acts as a midpoint, and therefore, the developing impulse wave has a tendency to mirror the one that preceded it. Applying this ideology to this wave structure creates a price objective of $16.50.
Analyst Take:
I am bullish on Immunomedics stock because the indications generated on the company’s stock chart continue to suggest that the path of least resistance is geared towards higher stock prices. I will maintain my bullish view on IMMU stock until there are indications suggesting that another view is warranted.
