After a strong 2014, Celgene (NASDAQ:CELG) spent most of 2015 in a range between 108 and 127. In July it popped above that range after it reported earnings and settled there. But then the market pullback dragged it lower as well, into the channel and then to the bottom of the range in just 3 days. The bounce brought it back to the top of the range before starting lower again two weeks ago.
Friday it had a strong move lower to the bottom of the channel, where it has held the 5 previous times. As it arrives the Bollinger Bands® are opening to the downside. Momentum is also weak. The RSI is in the bearish zone, but close to being technically oversold. While the MACD is turned lower and falling.
There is support lower at 108.30 and 103.80 the bottom of the red band. Then support may show up at 96 and 89 followed by 84. Resistance to the upside comes at 113.25 and 117 followed by 120.35 and 124 before the top of the channel at 127.25. Short interest is low, under 2% and the company is expected to report earnings next on October 22nd.
A look at the options chains shows weekly options out through November 6 Expiry. The October 2 options open interest is spread out well and biased to the upside with calls at 112 and above, highest at 129 and 131, and puts at 106 and up through 122. October monthly options open interest is very large at 105 on the put side with 115 and 125 as large levels on the call side. And October 23, 1 day beyond earnings shows little activity, but focused on the put side at the 108 strike.
- Trade Idea 1: Sell the stock short on a move under 107.50 with a stop at 109.
A straight stock trade. - Trade Idea 2: Buy the October 2 Expiry 108 Puts (offered at $3.10 late Friday).
A defined risk method to participate in the downside. - Trade Idea 3: Buy the October 2 Expiry 108/104 1×2 Put Spread (free).
For a short term push lower, with the possibility of being put the stock with a basis of 100 Friday. - Trade Idea 4: Buy the October 109/105-100 1×2 Put Spread (20 cent credit).
Looking for the large open interest in October to anchor the stock near 105 and no risk of owning it until it falls below 100. If put the stock then it would be with a basis of 95.80.
After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday, which as the market closes out the quarter and moves into October, sees the equity markets still looking weak.
Elsewhere look for Gold to continue in its short term uptrend while crude oil consolidates. The US Dollar Index also looks to continue broad consolidation while US Treasuries are biased lower in consolidation. The Shanghai Composite looks to continue its consolidation in the downtrend while Emerging Markets are biased to the downside. Volatility looks to remain elevated keeping the bias lower for the equity index ETF’s (NYSE:SPY), (NYSE:IWM) and (NASDAQ:QQQ).
Their charts suggest there may be more pain with the SPY looking the worst on the short term basis and the IWM and QQQ possibly catching a break and just consolidating. The longer term all look a bit stronger but nothing to have a party about with more downside risk as well. Use this information as you prepare for the coming week and trad’em well.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.