Gilead Sciences GILD is a giant in Pharma space and has two enormously successful treatments: 1. HIV and 2. hepatitis C virus (HCV). The company has also recently acquired Kite Pharma, a company that specializes in Cancer treatment. Gilead is a 94 billion dollar market cap company with a huge cash stockpile of more than $40 billion. It means company has lots of fund to target growth
Science of Stock Price Action: When a stock turns around on a weekly chart by making a big candle move, then the stock usually becomes buy on declines on a pullback at the same moving average.
Now let us look at Gilead Sciences stock chart from that perspective
As you can see in the weekly chart above - the stock sold off from 50 week ma in April 2016 and then stock once again resisted that moving average in June 2017. Now stock made a big candle turnaround in July 2017 and rallied big to levels of 85. This move is a classic Technical turnaround and hence make the stock buy on pullback near moving average. The previous resistance now becomes support
The stock is back at 50 week moving average - making the stock a strong technical buy. We will review this stock few months down the road to see if the turnaround is working 🙂
With the CEO very bullish on growth prospects, and company trading at low PE with lots of cash on books - a textbook turnaround looks quite promising.
Science of Stock Price Action
The Business of Investing is not same as Investing in business. You have to know how stocks make a move and try to capitalize on that opportunity. It means following fundamental newsflow and its impact on Price Action.
Price Action is one of the best ways to make good investment decisions. That's what I teach all the time.
If you find Price Action fascinating - then Science of Stock Price is a good place to start. It's a website designed to help you learn various Price Action concepts.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers