Market Got You Sick? Take a Dose of Teva Pharmaceutical (TEVA) and Call Me Back in a Few Weeks When You're Feeling Better!
I have so many great stock picks right now that it was hard to choose which one to post this week. After a long period of debating with myself, I decided to choose one that I thought was setting up nicely for a breakout come mid-April/early-May. That one stock was Teva Pharmaceutical Industries (TEVA).
Teva Pharmaceutical describes themselves as a global pharmaceutical company specializing in the development, production and marketing of generic and proprietary branded pharmaceuticals as well as active pharmaceutical ingredients. Teva is among the top 20 pharmaceutical companies and among the largest generic pharmaceutical companies in the world.
Teva's recent pullback has setup a great buying opportunity here.
Back in October Teva rallied all the way from 33 and peaked in mid-December around 55. It has since then naturally pulled back to around 40 where it has found resistance twice (other wise known as a double bottom that confirms the intermidate term base). Teva has also reported record sales and earning for fourth quarter and all of 2005.
As Teva continues build its intermediate term base look for it to push its way back up towards 43. Eventually what is going to happen is the 200-day SMA will push the stock price above the resistance provided by the declining tops resistance level that I have indicated for you on the graph below. This is also known as your typical "cup and handle" stock chart pattern. I believe this day will be somewhere around mid-April/early-May and when the day does come, shares should accumulate rapidly and the stock should breakout soundly to the upside. The upside gains will swift and furious until the handle of the stock chart pattern begins to form. The will endure for a couple weeks followed by more upside movement.
Look to purchase your shares at one of two critical points. The first being the resistance provided by the 200 day SMA and the second being the day the stock shares actually break out. A confirmed breakout will be noted by high volume and stock price closing above 43 and preferably closer to 44.
Please let me hear your thoughts on this stock or others in the same industry (Health Care/Biotechnology & Drugs) by posting to the comments section below.
UPDATE: TEVA broke out strong yesterday on some good news with respect to the court case they won. This breakout should reverse the recent ascending tops pattern and start the stock in a direction. One with a more bullish tilt. For those of you who have been patient and held in there - congrats on seeing green now :-) Sit back and enjoy the rest of the run!