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Celgene back from 2-year slump?

June 21, 2017

U.S. stock indexes rallied midday Wednesday on strength in the biomed space.

The Nasdaq advanced 0.7%, while the S&P 500 added less than 0.2%. The blue chip Dow Jones industrial average was barely below the day’s break-even line. Volume rose on both major exchanges.

Biomed stocks showed exceptional strength. In the Nasdaq 100, five of the day’s top six gainers were biomed stocks. Regeneron Pharmaceuticals (REGN) rose 6%; Incyte (INCY), 5%; BioMarin Pharmaceutical (BMRN), 4%; Biogen (BIIB), 3.5%; and Celgene (CELG), 3%.

Celgene broke out of a consolidation, clearing a 127.74 buy point in volume that soared more than 300% above average. The pattern is first stage. Celgene has been consolidating for almost two years. A consolidation that long will push down the Relative Price Strength Rating and that is what has happened with Celgene. The RS rating, as seen in IBD Stock Checkup, is 68, which means the stock is lagging about a third of the market in price performance.

IBD-style investors will put less emphasis on the RS Rating when it comes from a long consolidation.

Celgene’s earnings picture is solid. The Street expects earnings to rise 23% this year and 21% in 2018. Pretax margin last year was 50.4%, the best in at least nine years.


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