Reader Request: CELG

 

A reader commented on CELG’s ability to bounce uniformly from the 200 day average. After glancing at the chart, it looked worthy of some study.

Bullish Jim has done some great work with filters that select stocks that are approaching the 200 day simple moving average. My own tweaking and testing of his filter has returned results with a 75% win rate and a return on investment of roughly 80%. While I didn’t run any screens with the filter last week, CELG looks like it might have made the screen. Regardless, CELG has behaved exactly as we would have hoped after a near touchdown on the 200 day.

CELG has established a clear pattern of bumping and running from the 200 day. Whether this pattern continues is anyone’s guess. I believe that if the market firms up and doesn’t make any new lows, that CELG may continue with this established pattern.

 A gap-fill is a distinct possibility in the area of $67-$68. However, I would also expect resistance in this area from the overhead supply and the falling 50 day average.

While the MACD is almost crossing over and the Stochastics just gave a buy signal, the prime time for purchasing this stock would have been the morning after the hammer was formed just above the 200 day average. Backtesting of Jim’s filter has also shown that in order to achieve the most consistent profits from this strategy, CELG would have been sold on the open, Friday.

I am happy to consider reader requests for technical analysis. However, if the chart is ugly, or I am short on time, I will not be able to publish it.