As Alnylam Pharma Shoots Higher, Trade With a Dose of Reality

Alnylam Pharmaceuticals, Inc. ALNY has an experimental heart-disease treatment that topped expectations in a highly anticipated study. The stock is trading sharply higher, by around 35% as of this writing.

Let's check out the charts and indicators.

In this daily bar chart of ALNY, below, I can see that prices were testing the declining 200-day moving average line on Friday. This Monday prices have gapped above the 200-day line (not plotted yet). 

The slope of the 50-day moving average line has just turned positive. The trading volume shows an uptick on Friday and the On-Balance-Volume (OBV) line shows strength in June. The Moving Average Convergence Divergence (MACD) oscillator is now above the zero-line in a buy signal.

In this weekly Japanese candlestick chart of ALNY, below, I see a positive looking chart picture. Prices are breaking a longer-term downtrend (not drawn) and have climbed above the declining 40-week moving average line. The weekly trading volume has increased the past three months. The OBV line has begun to improve after a long decline. The MACD oscillator has crossed to the upside for a cover shorts buy signal. ALNY needs to cross above the zero line for an outright buy signal.

In this daily Point and Figure chart of ALNY, below, I can see an upside price target of $178. This is likely to get revised higher.

In this first weekly Point and Figure chart of ALNY, below, I can see an upside price target in the $211 area.

In this second weekly Point and Figure chart of ALNY, below, I used a five box price reversal filter. Here the software is projecting a price target in the $254 area.

Bottom line strategy: Aggressive traders could go long ALNY only on a two-day pullback. Use a money stop (a stop level that you can afford) and not a stop level based on the price action.

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