Gilead Sciences (GILD) - Get Gilead Sciences, Inc. Report has been battling heavy resistance near its 200-day moving average since the middle of last week. The stock has remained in a tight range during this struggle, but that may soon change.
As Wednesday came to a close, it was becoming more evident that Gilead had weakened its heavy 200-day and was headed for a breakout. The stock is not in the clear yet, but investors should keep a close eye on the action in the near term. A move past last week's high near $108.25 could spark a healthy rally.
Over the past four weeks, Gilead has been working through a bullish consolidation pattern. The stock has been straddling its 200-day moving average during this process as volume has remained well below average. Gilead will need a nice uptick in buying interest to end the range-bound trading with an upside breakout. The setup is pointing that way, but in the meantime, the stock remains in a very low-risk entry area. If an upside move fails to materialize, investors will know fairly quickly.
Over the next few sessions, Gilead bulls should consider the stock a buy in the $108-to-$106 area. A close below Tuesday's low of $105.50 would indicate that more consolidation will be needed before Gilead enters a new rally phase. An important hurdle for the stock will be a close above the October peak of $111.11. Once past this level, the stock will be on track for a challenge of its 52-week high set back in June.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.