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by Arthur Hill
While the broader market falls apart, relative strength and good upside volume point to higher prices for Millennium Pharmaceuticals.
Position: Accumulate
Arthur Hill
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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Millennium Bucks The Market
01/17/08 12:22:08 PMby Arthur Hill
While the broader market falls apart, relative strength and good upside volume point to higher prices for Millennium Pharmaceuticals.
Position: Accumulate
| A glance at the price chart indicates that Millennium (MLNM) surged in October-November 2007 and then consolidated in December 2007-January 2008. Most of the gains are holding and the stock remains above its 50-day moving average. MLNM hit resistance around 16.25 twice and formed a higher low in early January. In connecting the dots, an ascending triangle appears to be taking shape and a breakout would signal a continuation higher. See Figure 1. |
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| FIGURE 1: MLNM, DAILY. Millennium surged in October and November 2007 and then has consolidated the following two months. |
| Graphic provided by: TeleChart2007. |
| |
| Strong volume points to a breakout. Volume began picking up back in mid-September when the stock gapped above its 50-day moving average. Volume continued at an above-average pace as the stock advanced in October. The 50-day moving average crossed above the 200-day in late October as the advance extended into November. Even though a consolidation unfolded in December, upside volume remained strong and this shows continued buying pressure (blue arrows). |
| A relative strength breakout opens the door to a price breakout. The bottom indicator compares MLNM against the Standard & Poor's 500 exchange traded fund (ETF). This indicator rises when MLNM leads and falls when MLNM lags. The indicator surged in November and then traded flat in December. The upswing continued with a surge in January and a break above the November high. This is bullish and increases the chances of a breakout in the stock. |
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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