HGSI Basing Under Resistance
A healthy sign in a company is
continued innovation in the form of new products and new services. Genomics
companies hold the promise of producing a mother lode of innovation as they mine
the treasure trove of the human genetic blueprint.
Human Genome Sciences
(
HGSI |
Quote |
Chart |
News |
PowerRating) on
Wednesday announced its first drug product from the company’s genetic
technology. The company said it screened 10,000 different genes to find one
which would produce a protein to heal skin. The resulting protein spray, called
repifermin, helps heal the large, painful sores suffered by many elderly
patients.
As the following weekly chart shows, the stock
has been basing above its mid level of 149 1/4 but has failed to break above
resistance at 187 1/2 (see Point A in chart). Notice on that week how the
fallback from resistance occurred on heavy volume. That’s resistance to take
seriously and could form a valid pivot point for breakout players.
It always pays to compare charts of
stocks in the same industry group. You can see that genomics leader Celera
(
CRA |
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Chart |
News |
PowerRating)
has traced a similar pattern, giving way to resistance at 143 3/4 (see Point
A in following weekly chart). The stock’s mid level is around
163. So playing the long trade off a pivot point of 143 3/4 is a riskier trade
for the intermediate-term momentum player because of the threat of overhead
supply.
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All stocks, of course, are risky. In
any new trade, reduce your risk by limiting your position size and setting a
protective price stop where you will sell your new buy or cover your short in
case the market turns against you. For an introduction to combining price stops
with position sizing, see my lesson,
Risky Business. For further treatment of money management, check out the Money
Management area of TradingMarkets’ Stocks Education section.