Gilead Sciences GILD Collapses to Keep Steep Downtrend in Motion
“Strong Stocks Keep Getting Stronger while Weak Stocks Keep Getting Weaker.”
Gilead Sciences reminds us of this core trading principle today after breaking powerfully under a key support level with positive divergences, overruling any reversal signal to keep the persistent downtrend in motion.
This stock is nearing a point where it has lost half of its value since mid-2015.
And yes, this weak stock keeps getting weaker. Here’s the Weekly Chart:
As traders we’re always assessing the probability of a trend continuing or reversing.
Retracement or pullback strategies are designed to give us profits from a trend in motion staying in motion.
However, we have to be on guard for reversal signals such as divergences or price achieving a key target level.
Positive divergences set in motion a possible reversal up away from the $70.00 per share support target.
However, buyers failed to rally and reverse this stock higher off the $70.00 level, keeping the big downtrend in motion.
Buyers got trapped with the breakdown as a rapid “stop-loss liquidation” event triggered losses for buyers.
Short-sellers were emboldened, as they have been repeatedly with each retracement higher to the falling 20 week EMA – a core strategy of pro-trend retracement tactics.
Let GILD be an example of how risky it can be to trade AGAINST a strong trend in motion.
Weak Stocks Get Weaker.
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Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”