It was only two weeks ago that we wrote a bullish review of Bristol-Myers Squibb (BMY) - Get Report , and it has continued to move higher. I liked BMY on Aug. 31 and said, "I like the charts and indicators right now on BMY and I would be a buyer here risking a close below $54. On the upside, I would set my sights on the $69-$72 area."
BMY has moved up nicely since our analysis, and is trading around $63 plus, so the sell-stops should be raised. Let's review all the charts and indicators for BMY and make any midstream adjustments in our strategy.
In this daily bar chart of BMY, above, we can see how prices have broken out over the resistance at $58 and then the December/January highs around $60. Prices have formed what I would call a bull flag or bullish pennant pattern. This is a short-term continuation pattern in that the trend before the pattern (up in this case) is typically continued after the pattern. The surge up before the pattern was about $3, so the next move higher should also be about $3, so $66 is the next price target.
The slopes of both the 50-day and the 200-day moving averages are rising. The On-Balance-Volume (OBV) line is rising and confirming the advance. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a bullish mode above the zero line.
This weekly bar chart of BMY, above, is shaping up nicely. Prices are moving up and away from the rising 40-week moving average line. There is no chart resistance on this chart until the $70-$76 area. The weekly OBV line is moving higher, telling us that buyers of BMY are being more aggressive. The MACD oscillator has crossed above the zero line for an outright go-long signal on this timeframe.
This Point and Figure chart of BMY, above, gives us a $69 price target. Let's round up to $70.
Bottom line: I love it when a forecast works out and readers make money. I would suggest raising stop protection to a close below $60, which will lock in a profit. On the upside, I would look for gains to the $70 area after $66.
This column originally appeared on Real Money, our premium site for active traders. Click here to get great columns like this from Bruce Kamich, Jim Cramer and other writers even earlier in the trading day.
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