Warning signs are popping up all over the place in the stock market.
The Dow has just formed a bearish pattern and confirmed that pattern. In addition, the Dow never did confirm last week’s high in the S&P 500. Momentum has been on the decline in most major indices.
The common advance/decline line did not confirm the S&P’s high last week. This is the first time that has happened this year. However, the market continues to rise.
In a questionable market, it pays to find the best of breed.
The company: InterMune
Ticker Symbol: ITMN
InterMune focuses on the research, development and commercialization of therapies for pulmonology and orphan fibrotic diseases in North America and Europe.
Related Link: 2 Biotech Stocks With Massive Increase in Short Interest
The company develops therapies for the treatment of idiopathic pulmonary fibrosis, a progressive, irreversible and fatal lung disease. It markets and sells pirfenidone, an orally active, anti-fibrotic agent under the Esbriet name.
Take a look at the nine-month chart of Intermune with added notations:
If you compare InterMune with most of the other biotech names out there, you will notice that it has outperformed the majority. Even better, the stock is approaching yet another 52-week high.
A break through the 52-week high resistance at $47.50 should mean much higher prices for the stock. However, a fall back down to, and break of, $40 will most likely mean InterMune’s run is over for a while.
InterMune isn’t set to release earnings again until August 6, 2014.
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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