Markets
MRK

3 Big Stock Charts for Thursday: Merck & Co., Inc. (MRK), Gilead Sciences, Inc. (GILD) and Valeant Pharmaceuticals Intl Inc (VRX)

A generic image of a pen, a calculator and sheets
Credit: Shutterstock photo

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Biotechnology and pharmaceutical companies have been showing a lot of strength lately as investors have been migrating back into the sector. The reason for the migration back to these stocks is the fact that the political wheels appear to be spinning towards some resolution on the future of health care regulation.

While some stocks in sectors still remain buys, according to our models, there are some stocks that have come too far, too fast. The rapid rally has put a few names like Merck & Co., Inc. (NYSE: MRK ), Gilead Sciences, Inc. (NASDAQ: GILD ) and Valeant Pharmaceuticals Intl Inc (NYSE: VRX ) in positions where they are indicating a better buying opportunity is likely coming in the near-term.

Merck & Co., Inc. (MRK)

Pharma giant Merck didn't tumble to the relative lows that many of the other companies on our screens saw, but Merck shares now appear to be hitting an overbought level as they are breaking into an intermediate-term bullish trend.

  • The 50-day moving average for MRK shares just turned positive last week, indicating that the stock is likely to begin targeting a higher price target over the next 4-6 months. Traders are seeing this as bullish.
  • Last week, as Merck stock was trying to break into a volatility rally higher, they were rejected by the $66-price-level near the March highs. Traders saw overbought indicator readings as the opportunity to lock-in profits, sending MRK stock back below its 20-day trendline.
  • Support for Merck shares should kick in around $63.50 as the stock hits its 50-day and starts nearing oversold readings. This is where technical buyers are likely to begin buying again, targeting a price of $70 on the next rally.

Gilead Sciences, Inc. (GILD)

Gilead has spent the last two weeks rocketing higher after consolidating at $64. GILD stock broke through its 50- and 200-day moving averages during this volatility rally and are now pulling back into a range as sellers take control.

This is likely to create a buying opportunity in the near-term.

  • Gilead shares are currently coming off of some extremely high readings of its RSI. We've not seen readings this high in more than a year, so the profit-taking was expected.
  • The shares hit round-numbered resistance at $47 at the same time that GILD was extending its volatility rally deep into overbought territory. This will put more pressure on the stock in the short-term outlook.
  • With the 50-day moving average for Gilead shares turning higher, the stock is entering a sustainable technical rally that is likely to target $78, which is the site of Gilead shares' 20-month moving average. A break above this will put the stock back into a long-term bull market rally for the first time since December 2015.

Valeant Pharmaceuticals Intl Inc (VRX)

Valeant Pharmaceuticals shares are rallying from long-term oversold readings that have helped the stock consolidate and form a long-term bottom at $10. Now, the short-term trend of higher highs and higher lows is beginning to attract technical buyers.

That said, the short-term charts are pointing to a pullback that will open the doors for a technical value play.

  • Shares recently rallied from $12.50 to $17.50, shifting VRX stock into an intermediate-term bull market trend by transitioning the 50-day into an uptrend and breaking the shares above their 200-day. This is attracting chart-watchers.
  • Today, Valeant shares are breaking back into their Bollinger Band channel as the stock moves back below $17.50. This is likely to increase selling pressure on the already technically overbought stock.
  • Our technical models indicate that support will kick in around $15-$15.50, where more technical buyers will swoop in on this bullishly biased stock as it presents a technical value. From there, we expect VRX shares to work towards a target of $19.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.

More From InvestorPlace

The post 3 Big Stock Charts for Thursday: Merck & Co., Inc. (MRK), Gilead Sciences, Inc. (GILD) and Valeant Pharmaceuticals Intl Inc (VRX) appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

MRK GILD RAD

Other Topics

Stocks

Latest Markets Videos

    InvestorPlace

    InvestorPlace is one of America’s largest, longest-standing independent financial research firms. Started over 40 years ago by a business visionary named Tom Phillips, we publish detailed research and recommendations for self-directed investors, financial advisors and money managers.

    Learn More