Skip to main content

Bristol-Myers Flat After Report - Here's the Must-Hold Support Level

Shares of Bristol-Myers Squibb are flat despite the drugmaker's better-than-expected earnings and revenue. Here's the trade.

Bristol-Myers Squibb  (BMY) - Get Bristol-Myers Squibb Company Report isn’t giving bulls much to cheer about on Thursday.

The New York health-care giant's shares are flat on the day despite the company delivering an earnings and revenue beat. Further, guidance for the year was solid and above management’s prior outlook.

The stock remains well off its high from Jan. 19 as it struggled to find momentum ahead of the earnings. In that sense and in regard to how the stock is trading after earnings, it’s similar to Merck  (MRK) - Get Merck & Company Inc. Report.

Merck shares are down slightly on the day after missing on earnings and revenue estimates.

But the bulls are wondering whether Bristol-Myers is a buying opportunity, given that it beat expectations. Let’s look at the charts.

Bristol-Myers Squibb is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells BMY? Learn more now.

Trading Bristol-Myers Stock

Daily chart of Bristol-Myers stock.

Daily chart of Bristol-Myers stock.

Uptrend support and the 200-day moving average are the first things I see when I look at the chart.

Scroll to Continue

TheStreet Recommends

While Bristol-Myers hasn’t technically tested the 200-day moving average three times since December, buyers keep stepping in right near that level. As a result, an uptrend support (blue line) has formed from those lows.

The stock almost tested down to that level on Thursday morning, coming up just shy as the shares fell nearly 1% in early trading.

Now that they are about flat on the day, we need to see how Bristol-Myers stock trades from here.

If it moves lower, we need to see this support zone continue to hold. Should it fail, it could put $60 in play. Below that mark and perhaps a decline to the $57.50 area is in the cards, a zone that has been support since summer.

If current support remains in play, bulls can focus on the upside. Specifically, the 10-day moving average remains resistance, while the 50-day moving average remains a hurdle as well.

On Tuesday, the stock rallied as much as 4% but ended higher by just 1.2% on the day and down slightly from the open. The shares then fell in the following session ahead of the earnings report.

This wasn’t healthy price action. Not only did it cement the 10-day moving average as short-term resistance, but it gave an edge to the bears. That edge didn’t dull with the post-earnings move we’re seeing today.

Long story short, bulls need to see Bristol-Myers take out the 10-day and 50-day moving averages. Above puts this week’s high in play at $64.64. Above that and the January high may be in play near $67.