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Medimmune Inc.

02/08/05 02:58:53 PM
by Koos van der Merwe

Here's a biotechnology company with several products on the market and a diverse product development portfolio. Is it worth looking at? You decide.

Security:   MEDI
Position:   Buy

On the whole, biotechnology companies are companies researching cures for specific diseases. Nine times out of 10, their research fails to find a cure, but--and this is an important but--failed research narrows the field, finding what does NOT work. Eventually, with patience and perseverance and a great deal of cash, a product is discovered that is truly a miraculous cure.

Figure 1: Medimmune six-month chart

Medimmune has a number of products already available on the market. The company also has a very impressive research and development profile. Its net earnings for 2004 were negative, but net earnings for fourth-quarter 2004 were positive. Insider activity shows sales in August 2004 at the $23 level (see Figure 1). Since then, the share price has risen to a high of $28.72, trading in a sideways pattern before eventually breaking down on a gap, forming a low, then a high and finally a lower low. This pattern is the trigger that brought this stock to my attention.

Figure 2: Medimmune Inc. three-month chart
Graphic provided by: AdvancedGET.
In Figure 1:
1. The commodity channel index has given a divergent buy signal. The indicator has made higher lows, while the share price has made lower lows.
2. The moving average convergence/divergence (MACD) indicator has broken above its trigger and given a buy signal.
3. The stochastic indicator has also given a divergent buy signal.
4. Volume rose strongly with the move upward, signaling strength.

Now, in Figure 2:
The price fell to a low of $23.75, rose to a high of $24.98 and then fell to a lower low of $23.29. It then rose strongly on a gap to its present level of $24.42. What triggered my interest is that the price rose from a low then a lower low pattern on a gap, and in doing so rose to and is testing the 38.2% retracement level of $24.51 from the low to the high as shown on the chart. We can wait for a break above this level to place a buy order, or on the more conservative side, wait for the price to break above the high level at $24.98 before initiating a buy.

Medimmune is definitely a stock to watch for a possible future trade.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address:

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