Exelixis (EXEL) is a new biotech position of mind that is currently at the bottom of its recent trading range with relatively strong support. After a strong rally from January, EXEL has finally pulled back towards support levels and looks to be setting up for another attempt north. Unless we gap-down large, this setup is a favorable risk/reward plays as we can keep a tight stop loss reducing risk yet we have a fair amount of upside reward before testing resistance near the 52-week highs.
I prefer plays near the 52-week highs because those stocks typically have strong support to begin with providing favorable odds for more bullish momentum. Due to the market uncertainty, I am also keeping extra attention towards biotechnology as it tends to perform well during uncertain market environments that have not moved towards a market sell-off.
EXEL recently announced a share offering priced at $11 that looks to close on the 15th. This $11 should provide near-term support further creating odds of upside reward and limited downside risk. We are also right on the 50-day SMA, providing additional support near the bottom of the trading range. A stop loss under $11 should keep the downside risk limited with upside resistance near $12.50. I’d look to start peeling off some shares near resistance and if we can break above a new 52-week high with enthusiasm, I’d quickly add back to my position and ride the momentum on the breakout. See the charts below for further analysis.
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EXEL Yearly Chart
EXEL Monthly Chart
As always, do your own homework to see if you agree. Good luck out there.
Mike
At the time of publication, Kudrna was LONG EXEL but positions may change at any time.
