Alexion (ALXN) - Get Report shares surged Thurday after reporting earnings, ending the day up 8% to $131. The biotech company's stock started rising with a powerful breakout gap that lifted shares over 3%. They only went higher from there.
This impressive surge is leaving behind a very solid support zone. Investors should take a much more positive view of shares in the near term.
Back in early June ALXN suffered an extremely damaging breakdown on negative news regarding its Soliris drug. Three weeks later shares had lost over 25% before finding support near the $112 area.
Since then the stock has been attempting to build a base while consolidating in a narrow range. This month the range tightened further as earnings neared. Following today's news inspired rally a major bottom appears to be taking shape.
ALXN's ramp has taken out a major overhead trendline that links the August and September highs. The next challenge for the stock will be its declining 200-day moving average near $136. The stock has not tested this key long-term indicator since early January of this year.
Once this area is convincingly cleared, ALXN has plenty of room to run. As this plays out investors should consider the stock a buy on weakness. Solid support is now in place from the $130 to $126 area.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.