Gilead Sciences Is Breaking Out Of A 6-Month Consolidation

Gilead Sciences, Inc (GILD) - a large cap bio-pharmaceutical company is known for its vast product portfolio for the treatment of human immunodeficiency virus (HIV). After the recent failure of Bristol-Myers Squibb's experimental hepatitis C drug INX189 it seems that Gilead becomes a lider in developing an "all oral" combo of Hep C drugs with its promising experimental drug GS7977.

After the December-January rally, the GILD stock price entered into a 6-month consolidation phase. A pattern formed during this phase resembles a Cup And Handle pattern (blue). Though it doesn't look like an ideal pattern, two breakouts through the previous highs have occurred on increased volume (green arrows) confirming that the consolidation period might be over.

Following the breakout through the February high the price formed a well defined bullish pennant (magenta). The pennant was stopped at the breakout level and the price moved higher today. A potential price target from a consolidation pattern measured from the depth of the pattern (~12) and added to the point of a breakout gives us the 66 area.

Now let's take a look at the GILD short-term P&F chart with the 30 min period and 0.25 pts/box (box size is adjusted to intrinsic volatility of the security within a determined time period). Before today's action a Bearish Pattern Reversed with lower lows and lower highs was formed (green lines) on this short-term chart. That is how the pennant on the GILD daily chart looks on the short-term P&F chart. Today the price formed a new column of Xs (light blue boxes) which rose past the previous column of Xs and gave a new short-term buy signal (magenta line). My "buy limit" order was triggered and filled upon this signal.

Disclaimer: I express only my personal opinion on the market and do not provide any trading or financial advice (see Disclaimer on my site).