Incyte Pharmaceuticals

INCY

Company. "Incyte's vision is to become a leading drug discovery and development company by building a proprietary product pipeline of novel small molecule drugs.... [They] have active internal drug discovery programs focused on the identification of novel small molecule drugs for inflammation, cancer and diabetes and we recently entered into a collaborative license agreement for Reverset™, a novel nucleoside analog reverse transcriptase inhibitor, which is in Phase II development to treat human immunodeficiency virus (HIV) infections." (company website)

Buy. Incyte seems to have bottomed about a month ago; it has been climbing steadily ever since. The tend is very strong (ADX line). The 50-day moving average finally turned up last week. The price has been hugging the upper Bollinger band (wavy green line) for a week on higher-than-average volumes. More money has just started flowing into the stock (CMF) than out.

My one reservation is that INCY has perhaps climbed too far too fast. It is up 55% in the past month. On the other hand, it has already had a substantial correction this summer and is almost $2 under its 52-week high. There's still room to move, but it will bear watching carefully — September, after all, is when the market "swoon" typically occurs.

Sell. Yesterday INCY opened and closed at the same spot after trading much lower during the day, forming a "deliberation" candlestick. Accordingly, I was watching it like a hawk today. At first, it looked OK — although almost everything else was trading lower, INCY rose and even got over $9. But then late in the session in started to fall, and today's volume was huge. Seeing that, I put in a sell order. Let's face it, I've become hyper-cautious.

I really don't know how to interpret today's huge volume with almost no price movement. I suppose it could mean that huge numbers of people decided it was time to take some profits while an equal number of people were willing to buy at that price because they think it's going up some more. I just don't know how to play those odds. I'm pulling a few dollars profit out and waiting to see what happens. My guess is a pull-back is in order, but I've been wildly wrong before.