As Biogen Surges on Alzheimer Trial Results, Here’s How to Play It

Biotechnology firm Biogen (BIIB) and their Japan-based partner Eisai Co. Ltd reported better-than-expected results from a late-stage study of their developing Alzheimer’s treatment. A successful treatment for Alzheimer’s could be worth tens of billions in sales for Biogen. Biogen also received upgrades from several sell-side firms on Wednesday.

BIIB shares have jumped around 50% in early trading activity Wednesday, so let’s check the charts and indicators.

In the daily bar chart of BIIB, below, we can see that the shares have traded sideways since February. BIIB is going to gap strongly above the 50-day and the 200-day moving average lines.

The On-Balance-Volume (OBV) line declined into a June low and has improved the past three months, signaling a shift from aggressive selling to aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator is slightly below the zero line.


In the weekly Japanese candlestick of BIIB, below, we see a mixed picture. Prices are going to gap above the 40-week moving average line.


The weekly OBV line shows weakness unlike the daily chart. The MACD oscillator is bearish.



In this daily Point and Figure chart of BIIB, below, we can still see a downside price target but when BIIB opens for trading Wednesday the chart will make a rally above $224 and the chart will turn very bullish.



In this weekly Point and Figure chart of BIIB, below, we used close-only price data. Here the chart shows us a $273 price target.



Bottom-line strategy: Traders looking to go long BIIB should wait for several days of sideways price action before probing the long side.


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