Thursday, July 12, 2012

Biogen (BIIB) hints at forthcoming volatility; Ctrip (CTRP) and Ebay (EBAY) approach strong support

Three NASDAQ-100 securities are in the spotlight today, all with interesting price action vis-à-vis their significant price channels.

First though, the broad market traded horizontally for much of the session, with brief volatility occurring only toward the end of trading on a release of Fed minutes. The S&P500 ended unchanged, the NASDAQ slipped 0.5%, and the DJIA gave up 0.4%.

The 2-year chart of Biogen Idec (BIIB), a Massachusetts-based biotech company, paints a decidedly bullish picture. The stock has not dipped below its 200-day simple moving average since July 2010.

BIIB, 4 y 1d (zoomed in)
Two upward-sloping price channels nicely envelop almost all of BIIB’s price action, and over the past few months, the stock has been burrowing into a triangular wedge between the two. This “burrowing” has been marked by a decrease in volatility, and it appears to be a safe bet that volatility will expand as Biogen violates either the yellow resistance line or red support line.

Whereas Biogen enjoys a two-year bull market in its equity, (CTRP), the Shanghai-based travel agency, is decidedly out of favor among investors. The stock is at a 3-year low and approaches support (at about $14.7) from a 4-year price channel.

CTRP, 5 y 1d
On the hourly candles chart, a well-fitting price channel extending to early March likewise suggests support about a dime or quarter below $15.

CTRP, 100 d 1h
Ebay’s charts are subdued compared to the multi-year bull or bear parades of its two NASDAQ brethren. Looking at hourly candles, the last week has seen EBAY break below a trendline that has soldiered on since the market nadir of last Thanksgiving. After a pullback to touch the trendline once more, the stock has subsequently declined and now approaches horizontal support around $38.25.

EBAY, 180 d 1h
On the five minute candles chart, extrapolation of the well-fitting price channel suggests that $38.25 might act as support around the end of tomorrow’s trading or the start of Friday’s.

EBAY, 20 d 5m

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