Last month Investor's Business Daily rated Vertex Pharmaceuticals (NASDAQ:) as number four on its list of the best ESG stocks, giving the company high marks for its environmental, social and environmental values ??and practices and administration.
The site also noted that investing in Vertex was not a compromise for ethics-minded investors seeking stock strength and growth potential. The rating also reflected "broad strength in fundamental and technical areas related to stock price performance."
The Massachusetts-based biotech specializes in gene-editing therapies for a number of diseases, including cystic fibrosis. Geoff Meacham, chief executive of Bank of America, agrees with the fundamentals and targets a stock price of about $275 over the next 12 months, up $75 or 28% from its current $198 level in the next 12 months.
The company is scheduled to release Q2 on Thursday, July 28, after the shutdown. It is projected to post earnings per share of $2.19 on $1.72 billion in revenue.
We also bet on a move of $75, but in the opposite direction. Our target price is lower, down to $125, for about a 38% drop in value. That's because, on Vertex's technical map, the supply-demand balance is poised for a sharp decline.
During the first week of June, the stock completed a massive 19-month H&S summit, in play from November 2019 to May 2021.
Volume activity supports the reversal from buying to selling, as illustrated by the falling volume on the RSI within each price rise amid the H&S top, as well as the spike in volume with each drop – a sign of where the strength was.
We see the same negative divergence through declining price momentum in June and July, revealing weakness in the head of the pattern, before forming the right shoulder and creating a downward breakout.
The price found what we expect to be its last support through the 200-week MA, while the 50-week MA was already below its 100-week counterpart, threatening a Death Cross when it drops below the 200-week MA. .
Trading Strategies
Conservative traders should wait for the possibility of price returning all the way to the neckline and verify resistance, or close below the 200-week MA, which will then test it again from below.
Average traders could wait for the same trading pattern, but for closer access, not necessarily further confirmation.
Aggressive traders are allowed to enter at will, provided they do so with understanding and acceptance of the risks and following a trading plan to which they are committed. Here's an example:
Trade example
Entry: $200
Stop Loss: $205
Risk: $5
Goal: $125
Reward: $75
Risk: Reward Ratio: 1:15
