by Shane Ormond
On May 21, 2020
Target reported that online sales on an average day in April exceeded last year’s Cyber-Monday sale, because if you’re not going to buy a Cuisinart Perfectemp 14 Cup Programmable Coffee Maker at the end of the world, when are you gunna buy one?
Yesterday, we looked at a Daily Price Chart and an OBV line chart for MongoDB, Inc. noting that the stock’s OBV line was sloping up.
Today’s Chart of the Day is a Daily Price Chart for Allogene Therapeutics, Inc. (NYSE: ALLO).
Allogene Therapeutics, Inc., a clinical stage immuno–oncology company, develops and commercializes genetically engineered allogeneic T cell therapies for the treatment of cancer. The company is developing UCART19, an allogeneic chimeric antigen receptor (CAR) T cell product candidate, which is in Phase I clinical trials for the treatment of pediatric and adult patients with R/R CD19 positive B–cell ALL; ALLO–501, an anti–CD19 allogeneic CAR T cell product candidate that is in Phase I clinical trial for the treatment of R/R non–Hodgkin lymphoma.
Now, below is a Daily Price Chart with the 50–Day EMA and 100–Day EMA for Allogene Therapeutics, Inc.
Back on May 4th, the ALLO 50–Day EMA (blue line) crossed above the 100–Day EMA (red line) indicating ALLO was showing a ‘Buy’ signal (circled).
MACD lines help traders verify the momentum of any given stock’s price.
They are plotted by subtracting the longer–term Exponential Moving Average from the shorter–term Exponential Moving Average.
In this example, we are using the most common parameters: the 26–Day Exponential Moving Average and the 12–Day Exponential Moving Average.
When the 12/26 Day MACD line crosses above the 9–Day EMA line, this signals a ‘Buy’.
MACD charts also include a histogram bar graph, which helps to indicate when a stock’s momentum is either accelerating or slowing.
You see, when a crossover initially occurs, the histogram’s bar will be near flat as the two indicator lines have converged.
As the 12/26 MACD and 9–Day EMA lines begin to separate, the bars grow in height. The widening gap indicates acceleration for the stock’s momentum.
When the histogram’s bars begin to shrink, the narrowing of the gap between the 12/26 Day MACD and the 9–Day EMA shows a slowing of the stock’s momentum. This can be a signal that a crossover of the indicator lines could happen soon.
As you can see in the chart above, once the MACD line crossed above the 9–Day EMA, ALLO’s share price began to rise.
If you had purchased ALLO shares when the MACD ‘Buy’ signal occurred for the stock back on May 4th, when the stock was around $31.68, you’d be up 51.98% by now.
Not a bad profit for less than a three week hold of a biotechnology company.
Now, as you can see, the 50–Day EMA is still above the 100–Day EMA. That means the bullish trend is still in play!
As long as the 50–Day EMA remains above the 100–Day EMA, the stock is more likely to keep trading at new highs in the coming days and weeks.
We’ll be keeping our eye on this stock as it continues to trend upward.
Additionally, we’d like to talk about how a previous Chart of the Day stock has done…
On May 7th, we highlighted PayPal Holdings, Inc. (NYSE: PYPL), noting that PYPL stock had been making a series of higher highs and higher lows.
If you happened to have purchased PYPL shares on that day, you’d already be up 13.5%.
But… if you had purchased the right option contract, you would be up 192.6% in less than three weeks’ time!
That’s the power of options.
Editor, Chart Of The Day