Market Overview

Intercept Pharmaceuticals Breaks Out

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Intercept Pharmaceuticals Breaks Out

The S&P 500 has stalled over the last month. The Nasdaq and Dow Jones Industrials haven’t fared any better.

However, there does seem to be signs that the market is preparing for a breakout to the upside. For the S&P, the 2120 area is the mark for investors and traders to watch.

Some stocks are already breaking higher.

One stock that looks to have already broken higher is Intercept.

The company: Intercept Pharmaceuticals, Inc.

Ticker Symbol: (NASDAQ: ICPT)

Sector: Healthcare

Industry: Biotechnology

Intercept Pharmaceuticals is a development stage biopharmaceutical company that focuses on the discovery, development, and commercialization of novel therapeutics to treat chronic liver and intestinal diseases utilizing its proprietary bile acid chemistry.

Related Link: Amgen’s Decline Could Be A Good Thing

The company primarily develops obeticholic acid (OCA), a bile acid analog that completed Phase III clinical trial for the treatment of primary biliary cirrhosis; is in Phase III clinical trial for the treatment of nonalcoholic steatohepatitis; is in Phase 2 clinical trial for primary sclerosing cholangitis; and is in Phase I clinical trial for the treatment of biliary atresia.

Review the one-year chart of Intercept with the added notations:

Intercept suffered a massive decline from its August 2014 peak until its December 2014 low. During that slide, the stock lost more than half of its value.

Then Intercept started just as strong of a rally, but that rally has repeatedly stalled under the $300 level.

While stuck under $300, Intercept formed a triangle price pattern. The great thing about consolidation patterns, such as triangles, is that they eventually have to break one way or another.

As noted in the chart above, Intercept broke out to the upside.

The stock closed Tuesday at $293.51.

Editor's note: Shares were down about 1 percent in Wednesday's session.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key.

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