Looking to trade Gilead Sciences (GILD)? Here are your pivots. (August 30, 2017)
I want to look at Gilead ( NASDAQ:GILD ). This company bought Kite Pharmaceuticals ( NASDAQ:KITE ); immunotherapy industry, big growth industry. You can see what happened with the stock today. I have got a position in this, Option Market Mentor has a position in this that is up 40 percent just today.
Here is the thing: Tomorrow my bet is we are going to wind up taking it off, because for no other reason than just as a function of discipline. When you see this stock move higher so fast on such volume, and it is a biotech company, which by definition means it is scary and it is volatile. When a stock moves up this much you really need to start thinking about protecting profits as opposed to counting how much more money you are going to make if the stock keeps going up.
If we look at this, and I am not saying sell into this tomorrow, not at all. If you look at the way this is trading after hours you can see (4:00 here) the stock is even higher. There is hardly any shares traded but the point is, there is not a lot of selling. There is not a lot of selling in this stock. What my suspicion is, is that the stock is going to open up higher tomorrow unless there is some kind of news, the stock will open up higher. And then at some point you are going to see some selling. We don’t know this for sure, but this is how I am trading it.
We will look at a 15-minute chart here, in fact let’s do pivots. I just calculated out the relevant pivot points for tomorrow. The pivot point and these are calculations that are based on pivot points that 4x traders, commodities traders, they are just commonly used and they have specific calculations for them. It is not complicated but you don’t need it, your trading software should be able to do this, I am just projecting forward tomorrow. I was just going to say, look at the 15-minute chart, the way this is trading. If the stock starts trading down below 81.00, if you are making this kind of a day trade or swing trade, you would want to be closing out a little bit below 81.00.
But I would look at this in a little bit different way. Let’s look at what could happen tomorrow. If the stock moves up the say 83.20, that is going to be the first level of resistance where you could expect some selling to take place. So, assuming the stock opens up tomorrow watch what happens when the stock hits 83.20. I am just going to set an alert, sure. And I am going to set an alert here, sure. And I will set an alert here (say it together), sure. Okay, so I just want to know where this stock is. I am setting all these different alerts and now I can go about my day. I don’t have to worry about what Gilead ( NASDAQ:GILD ) is doing.
If the stock is staying in between these two areas, the pivot point and then the first level of resistance, I will stay long the position. If on the other hand, the stock rolls down below this pivot point here, well this is the midline for tomorrow. If the stock is going to be strong it should stay above that level. If it starts trading below 79.47, then I am definitely going to want to take my long position off the table because this has just gone up too much. It has just gone up too long too fast too far. But if it doesn’t fall below here all I am doing is, I want to watch and see what happens at 83.20.
The thing about these biotech stocks is, they can just keep running, and running, and running. There is no real short squeeze here they can just continue to be bought. So don’t look at this from a rational level. Instead look at it from a technical standpoint. And as long as the trade is working, this is my biggest profit today, as long as the trade is working let it continue to move. I hope I can tell you tomorrow it is my biggest profit tomorrow too. As long as this is going let it go. Just watch and see what happens around 83.20. If the stock gets up that high I would definitely start snugging my stops up. Get them up a little bit so you can protect your profits in case the stock reverses.