Do You Trade BIIB? Read This…
It has
been a strong tape for this biotech big boy for the last 23 trading days.
The stock has climbed 13.7 points or 25% in that time frame from low to high.
Now that it has made that move what should an active trader be doing with this
stock?
Trader type 1: For traders that are long
I’d be taking partial profits
right now and trailing my stop up to just under $65 where price consolidated a
few sessions back before bursting up. I’m doing that because of the Bearish
Butterfly pattern that has printed into a large Fibonacci price resistance zone
from 67 to 71.
Trader type 2: For traders not long and looking
for shorts
Considering the Bearish
Butterfly pattern into our resistance zone (mentioned above), I’d be looking for
some reversal candlesticks on a daily time frame to print to trigger me into a
short swing trade. My initial objective on the downside out of this zone would
be in the range of 60 — 62.
Scenario to consider:
If BIIB closes above 71 on any
given trading day, this stock is communicating “strengthâ€. Why? It would be
pushing above a resistance zone and breaking up a major reversal pattern in the
Bearish Butterfly. So, if that occurs, I’d put it in my “long watchâ€, and buy a
pullback into a fib price support zone. Until the zone is broken though, I have
to focus on taking profits on longs and tightening up stops or for the more
aggressive trader, considering short swing trades.
Year End Tax Planning
Tip:
If you have any long term gain
securities and are charitably minded, consider this: Rather than giving cash to
your charity, give away some highly appreciated stock. You can avoid the long
term capital gain tax of 15% and take the money that you would have given to
charity and either use the cash personally or go back out and buy the stock that
you loved so much and step up your basis to the new purchase price. It’s a
beautiful thing.
Derrik Hobbs