The stock rocketed in premarket trading after the company reportedly agreed with Chinese authorities to study the effectiveness of an experimental treatment to help treat the rapidly spreading virus. The trial will take place in Wuhan, where the outbreak began.
There’s no telling what this will mean for Gilead or if it will work out for the patients, but the news is giving the stock a much-needed spark.
For the past 13 months, Gilead Sciences shares have hardly gone anywhere despite the broader market rallying to all-time highs. In fact, Gilead shares have mostly chopped between $60 and $68 during that time.
However, with Monday’s coronavirus news and Gilead stock’s subsequent rally, shares are on the verge of a big-time breakout. Let’s look at the charts.
Trading Gilead Stock
Shares opened near $67.75, which is right at the declining 200-week moving average. In the opening minutes of trade, Gilead stock climbed higher, briefly penetrating the $68.50 mark. Since the opening minutes though shares have mostly declined and are now below that opening mark.
Now, Gilead stock faces a tough test. Shares are struggling against range resistance (black line) and downtrend resistance (blue line) near $68, as well as the 200-week moving average. The latter has been resistance for several years now, as highlighted on the weekly chart above.
With this many resistance points so close together, the question becomes rather obvious: Can Gilead stock breakout over this area?
If it can, it could trigger a much larger move higher. The first upside mark is Monday’s high, at $68.68. Above that and a move over $70 will be on investors’ radar, with the $74 mark above that.
If Gilead stock can’t breakout and resistance holds steady, investors may look for a pullback to take place.
Specifically, the $64 to $65 zone is the first area of interest, with the 10-week and 50-week moving averages nearby. Below that and uptrend support in the low-$60s is in play. If that fails, range support down at $60 is in the cards.
Here’s the bottom line: Over $68 and Gilead stock can breakout and run higher. Below resistance keeps lower prices potentially on the table.