Shares of NYSE listed and human genetic researcher Genentech (NYSE:DNA) $39.88 +3.68% are making a new 52-week high and this 52-week high isn't just another consecutive 52-week high as the stock attempts a trade at $40, something this stock hasn't been able to do in over a year as demand has never been at high enough levels to outstrip supply.
What has caught my eye today isn't just the 52-week high, but the reverse head and shoulders pattern that looks to be developing and should it unfold, portends a longer-term price objective of $48.00.
In this afternoon's market monitor, we quickly reviewed the stock's point and figure chart. The current bullish vertical count is currently to $42.00 and this might grab a shorter-term bullish trader's attention and ties in with the way I'm using retracement to depict the reverse head/shoulder pattern. What interests me more though is that the reverse head/shoulder pattern objective of $48, would tie in nicely with the spread- triple top point and figure chart pattern if $40.00 is traded, which according to Professor Davis' probabilities of point and figure chart pattern could give an 85.7% probability that the stock could tack on a 22.9% gain over the next 7.7 months.
Genentech (DNA) - Daily Interval
I've "fit" my retracement bracket to reflect what I see as a reverse head/shoulder pattern developing in DNA. Using Professor Davis' study of probabilities and pattern recognition, I find a 22.9% gain from $40 calculating out to roughly $49.16, and rather close to the reverse head/shoulder objective of $48.
I like the DNA September $40 calls (DNAIH) $3.90 for 1/2 bullish positions (no stop, target $47.50 on/before expiration).