Jan. 18, 2000
One week ago, I
mentioned there were some interesting charts emerging in the health care group. At that time, I invited readers to email me some names they thought were interesting, too, and my mailbox quickly filled up. So, as promised, here's a recap of my observations on those charts.
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Q&A with Helene Meisler Today First of all, I'd like to thank everyone who submitted names. It provided me with plenty to do over this long weekend. Several emailers wrote lists and lists of ticker symbols, and others kindly offered me the "stories" behind the charts. Then there were those who might not know I like charts with bases since they suggested I may like the charts of stocks such as
, so perhaps I ought to begin with those highfliers.
I'm sure I'll leave out some names, but the charts of Celera,
to name a few, are not the kind of charts I typically find interesting. They are up on spikes, almost parabolic in their rises, often giving the impression they are leaning over backwards. Sure, these stocks can go higher -- much higher even -- but that type of momentum chart is not one I feel comfortable with, so I won't spend any more time discussing these charts.
I received a total of 94 health care names via email. (There were plenty of duplicate names.) I weeded through that list based on the daily charts: If I liked the daily chart enough to view the weekly, the stock went on to round two. The next group got nixed if their market capitalization was under $200 million. Eleven made it to the final list.
From that list, I made three separate lists: charts still building their bases; charts consolidating; and charts that have just emerged from their bases.
Since I've used the weekly charts as the guide on these, the base-building I'm referring to is based on a two-year weekly chart. Therefore, the daily chart may appear to show the stock has broken out, but the weekly says it's still early in that rise. As with all weekly charts, these moves should not be expected to happen overnight, but over months. One at a time, in no particular order, these charts are
Miravant Medical Technologies
Guilford traded at 25 nearly two years ago and has spent this time building a base. Its recent rise from 14 to 22 on volume has made this daily chart a bit overextended, but as you can see on the weekly chart, all it has done is rally into its resistance area. It seems to me that some digesting of the recent rise should follow, giving way to a breakout above the old high of 25. A simple calculated first target would be 25 (the high) minus 10 (the low)=15 added on to 25 (old high) to get 40.
Miravant is still building its base and has not yet come close to emerging. You can see for yourself the resistance in the 15 area, but after spending the past year and a half doing absolutely nothing, I'd expect this stock to keep eating its way through resistance all the way back to the 30-to-35 area.
Eclipsys has plenty of resistance right here around 30, but we can call this base a head-and-shoulders bottom (use your imagination since it is not a textbook H&S pattern) with 30 as the neckline. That makes the old high of 40 some resistance, but the measurement is closer to 50.
The last name in this category is Sepracor. Sure, that 135-to-140 area poses some resistance, but see the way this stock chooses to eat through resistance by moving sideways? So I'd expect it to move sideways before moving through to new highs.
In the charts that are consolidating along the way, I came up with two names:
. Biogen is the big-cap institutional name that was recently upgraded by several brokerage firms after its earnings report. A back-of-the-envelope target from this consolidation phase since September measures to the 120 area. Imclone simply takes rests along the way, which is something I like in a chart; however, it does not make it easy to calculate a target.
Finally we come to the group of charts that have just emerged from long-term bases. Almost all of them have reached their first target prices and should spend some time digesting their gains. This group includes
Emisphere has the growing volume I like. ViroPharma is missing the volume (which admittedly bothers me) but came down two weeks ago and tested the breakout at 30, which I do like. Immunomedics blew right through its old resistance at 6 on huge volume, which says to me there's likely more to come after a consolidation phase. The same can be said about Genome Therapeutics. Cell Genesys also has the rising volume but hasn't even reached its first target of 18 yet, so I believe there's more to come on this chart as well.
I know this list is exhaustive, and there may be a few of you who wonder about those "old" health care names that have been around forever.
is the chart I like the best in that group.
As a reminder, I hardly know what any of these companies do, let alone their financial situation. It is best for you to do your own homework when it comes to making your investment decisions. This list is simply meant as a place to start.
Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on TheStreet.com. Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at