Having Wonder Drugs For Breakfast

• Posted by Greg Harmon
• on October 26th, 2011

There are about 100 stocks that report earnings tomorrow morning before the market opens amongst them two mega drug companies. One with a storied 130 year history and the other only 30 years old and both from the two ends of my old train line NY City and Summit, NJ. But they have something else in common too. Both look set up to move higher. Let’s look at the charts.

Bristol Meyers Squibb, $BMY

Bristol Meyers Squibb, $BMY, is the 134 year old company with its headquarters in Manhattan. It also has a $55 billion market cap. But what interests me ahead of the earnings report is that it has been in a rising trend since the August 9th low, a slight broadening channel, and heading toward the bottom rail of the channel in a bull flag within it. All of the Simple Moving Averages (SMA) are pointing higher and the Relative Strength Index (RSI) remains bullish holding over 60. The Moving Average Convergence Divergence has been trending lower during the flag. Tomorrow’s report should resolve whether it will break the bull flag higher and continue the uptrend or if it will test the bottom rail of the channel and a potential break to reverse the trend. The chart suggests it goes higher.

Celgene, $CELG

The second Celgene, $CELG, is the baby at only 31 years old and still living in the suburbs in Summit. But with a 30 billion market cap it is in the big time. This chart shows the same rise from the August 9th lows, but with a bull flag in mid September that has already resolved higher. The Measured Move out of that flag targets a price of 74. The RSI remains bullish on this chart but moving sideways with the MACD hovering around the zero line indicating a continuation of the consolidation may be in the cards before the next move. The SMA’s are fairly flat and below which could draw price back. Look for the earnings report to be the catalyst for the next direction in this name.

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