Exelixis Inc. (EXEL), a biopharmaceutical company focused on cancer therapeutics, recently announced revenue that jumped 424.2% to $80.89 million – beating estimates by $15.66 million – and earnings of $0.05 per share – beating estimates by $0.06 per share. The stock responded by jumping nearly 7% from a $23.15 close on May 1 to a high of $24.70 on May 2, but eventually gave up all the gains by early trading on May 3.
On a technical level, the stock broke out from an ascending triangle pattern on the day of its earnings announcement but fell back below the breakout point on the same day. The next support level lies at the pivot point, 50-day moving average, and lower trend line support at around $21.50. If this level is broken, the stock could move down to S1 support at $20.52 or S2 support at $18.63 – a significant 9.24% to 17.6% move off its current price.
Technical indicators suggest some momentum left for the stock despite its recent declines. The relative strength index (RSI) has marched since early-April to about 60.0, which is still below overbought levels. And, the moving average convergence-divergence (MACD) has been steadily rising since early-April and crossed the zero line in late-April. These indicators suggest some ongoing strength that could support the stock price over the coming days.
Traders should watch for a breakout from upper trend line resistance to new highs or a breakdown from its lower trend line support to S1 or S2 support levels. Over the long-term, the trend remains very bullish since early 2015, although some investors are growing concerned that the stock’s lofty valuation may be stretched too thin at current levels.
Charts courtesy of StockCharts.com. Author holds no position(s) in stock(s) mentioned aside from passively-managed index funds.