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Bristol-Myers Squibb Bulls Take a Short Break

There is strong support just below the market for drug giant.
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Bristol-Myers Squibb  (BMY) made a modest pullback in the past week and closed below the rising 50-day moving average line, however, the charts show a significant band of potential support just below the market so this recent pullback may be a buying opportunity. Let's review all our charts and indicators for any additional clues or signals.

In this daily bar chart of BMY, below, we can see how prices broke out over the March, June and mid-August highs in late August. Prices rallied about $10 and have pulled back not quite two-thirds or $6 (the math will be different depending on your starting point). The On-Balance-Volume (OBV) line moved up in August and September signaling more aggressive buying and the line has declined this month as sellers have emerged. The Moving Average Convergence Divergence (MACD) oscillator peaked in September and is close to moving below the zero line for an outright sell signal.

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In this weekly bar chart of BMY, below, we can see that prices are still above the rising 40-week moving average line. The weekly OBV line has weakened recently and the MACD oscillator is narrowing towards a possible bearish crossover.

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This Point and Figure chart of BMY, below, is interesting in that the recent chart activity is a bearish column of "O's" but the chart indicated an upside price target of near $94.

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Bottom line -- it will not take much of a rally to push BMY back above the 50-day moving average line. A close above the 50-day average followed by a close above $65 will go a long way towards restoring the uptrend. I prefer the long side of BMY risking a close below $57.

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