Buy Allergan on the Way Up
Allergan (AGN) - Get Report has been tracing out a bullish flag formation since its powerful Oct. 29. This healthy three-and-a-half week action, which followed a five-day surge that carried shares over 22% higher, has given back very little of the huge rally off the October low. The stock is now beginning to show signs that an upside resolution to this bull flag is ahead. For investors, a close above last month's high would signal a new rally leg. Until then, Allergan remains in a fairly low-risk buy zone.
Allergan's powerful news-inspired ramp on Oct. 29 pushed the stock well past its 200-day moving average. The consolidation that followed has held this key level, giving the formation very solid footing. As long as shares stay above the current November low of $293.35, which rests just slightly below the stock's 200-day moving average, investors should remain bullish.
In the near term Allergan investors should keep a close eye on the October high. If the stock closes above this level, it's very likely that a bull run up to the 52-week highs is underway. A healthy boost in volume as Allergan moves past last month's peak of $317.05 will be a strong positive. Until then, the stock will remain in a bullish consolidation awaiting upside confirmation.
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Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.