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Is Gilead Finally a Buy After Huge Drop?

Gilead Sciences is starting the week off with a solid gain. Can bulls take control and drive shares higher?

Gilead Sciences  (GILD) - Get Gilead Sciences, Inc. (GILD) Report were off to a strong start on Monday, up about 2.8%.

Perhaps it’s President Trump’s improving health situation with Covid-19. Maybe it’s Gilead's positive data for its Biktarvy treatment.

Either way, the stock is moving nicely on the day. The move comes after last week’s action in which Gilead traded higher on positive talk for its coronavirus treatment, remdesivir.

For the week, shares were about flat. However, Gilead held a key support mark in the process. Now investors are looking for a rotation higher from that point.

Of course, it helps that the biotech space is seeing a bit of a jolt on the day, with stocks higher and a notable M&A deal taking place as Bristol-Myers  (BMY) - Get Bristol-Myers Squibb Company Report scoops up MyoKardia  (MYOK) - Get MyoKardia, Inc. Report in a $13.1 billion deal.

Trading Gilead Stock

Daily chart of Gilead stock.

Daily chart of Gilead stock.

The nice thing about Gilead stock is that its trading levels are very clear. From a technical standpoint, that’s something traders love.

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For instance, check out the way that Gilead has respected its 200-week moving average over the years. Or how $65 was resistance all through 2019 and how $78 and $84 acted as clear resistance in 2020.

In much the same way, uptrend support (blue line) has been respected by Gilead stock all the way back to the fourth quarter of 2018. Most recently, the stock tested this level over the last two weeks.

On both occasions, support held, as bulls now look for a sustainable rotation higher.

Specifically, they are looking for a rotation over last week’s high at $63.84. A daily close above that mark could kickstart a rally back up toward the 10-week and 200-week moving averages near the $65.50 to $66 area.

Above that could put the 50-week moving average in play near $69 followed by a move back over $70.

On the flip side, investors have to be careful with a rotation in the opposite direction. Rather than a weekly-up rotation over last week’s high, keep an eye out for a weekly-down rotation below last week’s low.

A daily close below the two-week low at $61.65 would be a bearish development. Not only does it put a weekly rotation lower in play, it also drops Gilead stock below uptrend support.

That opens the door to sub-$60 and potentially puts the multi-year double-bottom near $56.50 in play.