Bull Chart of the Week: Edwards Lifesciences
Not only did Edwards Lifesciences (EW) put together a pretty nice week last week, up nearly 5%, but with a 10.5% gain during October, I'd say it was a pretty good month as well.
Even with these big moves, EW appears to be setting up for another push forward. The stock experienced a huge move between the summer of 2014 and the start of the second quarter in 2015, almost doubling in price. After a big April pullback, shares have traded in a somewhat wide ascending triangle pattern. This appears as a bullish consolidation. Last week's push creates a possible trigger for bulls looking for the breakout.
If focused on the weekly chart, my preference would be to see a close over $160 just to push above the summer highs here for a cleaner breakout. The upside here looks to be in the $175-$180 area based on price alone. But there are some bullish developments in the secondary indicators as well.
Edwards Lifesciences (EW) -- Weekly
Source: StockCharts.com
View Chart »View in New Window »
Volume has increased significantly over the past several weeks as price pushes higher. It is reflected not only in the volume bar charts, but also the rising Chaikan Money Flow (CMF) as well. The bullish crossover here on the MACD rally catches my attention as the stock has performed best when we've see a bullish setup. We often see at least several weeks of higher moves immediately following the crossover. Lastly, the Relative Strength Index (RSI) is back above 50. The best cross to buys appears to be a bounce off 50 or crossover from below 50, but this isn't a bad position. It appears headed towards a test of 70 and the stock has performed well in overbought territory in the past.
Expanding to a monthly view strengthens the longer-term view of EW here. The run from just above $60 all the way to $140 is easier to see from the monthly view. The stock has spent the last year in a bull-flag formation after the big move higher. Now we appear to be breaking out higher and $200 looks to be the minimum target over the next 12-18 months.
Edwards Lifesciences (EW) -- Monthly
Source: StockCharts.com
View Chart »View in New Window »
The volume is strong as seen in the Force Index and the RSI is back in overbought territory, which is where price has performed best. The stock has also done best with the Mass Index under 27, but I'll have to keep an eye on that as it is approaching 27 now. I'm not too worried as long as it continues to raise, but if we see a push over 27 then a fall back below 26 or even 26.5, then long-term investors may want to consider a short-term hedge.
Overall, the picture here looks very strong with a shorter term target of $175 in the fourth quarter and an end of the year 2016 of $200 on the table.
At the time of pubication, the author had no positions in any of the securities mentioned.