Come Take Your Medicine

BOZHOU, CHINA - APRIL 08: (CHINA OUT) Employees work on the production line of Shufeng Jiedu Capsule, a Herbal Medicine for treating avian influenza patients, at a workshop of Anhui Jiren Pharmaceutical Co., Ltd on April 8, 2013 in Bozhou, China. China is increasing efforts to stem a confirmed H7N9 bird flu outbreak which has infected at least 24 people and killed sseven. Many poultry wholesale markets have been closed in central and eastern China. (Photo by ChinaFotoPress via Getty Images)

The Medicines Company ($MDCO) aims to lead in acute and intensive care medicine worldwide. So obviously they need to make a lot of medicine. This was good news for the company during the major pullback in August and September last year. The stock rose over 55% while the rest of the market was in dire straits. The stock did take a hit in October when Hillary started rattling cages about drug prices but quickly recovered.

The top in December, just shy of the September high was the best it could do though. Since then it pulled back, reaching a new low as new investors were shaken out. The full action made for an interesting price pattern for a technician though. The bullish Bat harmonic reached its Potential Reversal Zone (PRZ) and has since retraced nearly 78.6% of the move higher. Once it gained separation from the 61.8% retracement it gave a target of a full retracement to 43.79.

mdco

That is some good news for holders. But there is another pattern at play as well. A classical symmetrical triangle has been tightening its range around 35.50. The current price sits at the top of the triangle and a break above would give a target to 43.50. Hmmm. Notice that price is meeting resistance at the June high. A push above this would trigger both targets.

Momentum supports a break to the upside. The RSI is in the bullish zone and rising and the MACD is rising as well. The Bollinger Bands® are pointing higher too. Time to take your medicine and add this stock to your portfolio soon.

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