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A Look At Gilead Sciences, Inc.

12/12/14 03:16:51 PM
by Koos van der Merwe

When Jim Cramer on "CNBC Squawk on the Street" says that he likes a stock, is it worth looking at?

Security:   GILD
Position:   Buy

On Monday morning, December 8, 2014 Jim Cramer shouted, as he usually does, that he likes Gilead Sciences (GILD), a biopharmaceutical company that discovers, develops, and commercializes innovative therapeutics in areas of unmet medical need. On December 8, 2014 the company made an announcement regarding research it had successfully completed. The share price opened up 2.11% in a bearish market open. Is this what lead to Jim Cramer's remark? What do the charts tell us?

Figure 1. Monthly Chart Of Gilead Sciences (GILD). The Elliott Wave count suggests that a WAVE 3 is completing.
Graphic provided by: AdvancedGET.
The chart in Figure 1 is a monthly chart of GILD, with an Elliott Wave count suggesting that the share price could be completing a WAVE 3, and that the trend is down into a WAVE 4 at either $92.74 or $78.33. The probability index (PTI) is 40, which is not very strong. The relative strength index (RSI) has given a divergence sell signal, that is where the RSI tops are falling, but the share price is rising. The Elliott Wave count on the chart is suggesting that there is the possibility that the WAVE 3 top could be $137.54, but the RSI sell may be negating this rise. Once a WAVE 4 is complete, the WAVE 5 target is $154.96.

Figure 2. Daily Chart of GILD. Here you see the Elliott Wave count suggesting that a WAVE 5 is complete and the stock is now tracing a wave i of a new bull trend.
Graphic provided by: AdvancedGET.
The daily chart in Figure 2 shows an Elliott Wave count suggesting that a WAVE 5 is complete and the share price now tracing a wave i of a new bull trend. Both the indicators, the RSI and MACD are showing buy signals, suggesting that the price could rise to $117, the high of WAVE 5, if not higher. That the share price abc correction after WAVE 5 bounced off a support line is also a plus. The share price gave a JM Internal Band buy signal on December 5, 2014. A JM Internal Band is a 15-period simple moving average offset by 2% positive and 2% negative. A move above the upper band, signals a buy and a move below the lower band, a sell.

Figure 3. Buy Signal. Here all tools and indicators point to a strong buy.
Graphic provided by: Omnitrader.
Finally, the chart in Figure 3 is an Omnitrader chart with a Vote line buy based on the Red Green Strategy Long 6, the JM Strategy and the Red Green Strategy Long Stop. Note the two indicators on the chart, the RSI 14 and the IndJak which have both suggested buy signals. Finally, note the Advisor Rating in Figure 4, which at 67 is a strong buy.

Figure 4. Advisor Rating. The buy rating is at 67 which is a strong buy.
Graphic provided by: Omnitrader.
Because of Jim Cramer liking the stock; because of the Omnitrader buy signal; and because of the positive Elliott Wave count suggested in Figure 2, I would be a buyer of Gilead Sciences. However, because the monthly chart in Figure 1 is suggesting further downside in the long-term, I would keep my stops close.

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.

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Vancouver, BC
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