Stock Indexes Add Tiny Gains, But Biotech Celgene Rockets; Is It Time To Buy?

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Stocks crawled higher Thursday amid another deluge of quarterly results. But Celgene raised hopes for biotech investors with a superb gain following a robust report on the top and bottom lines for the second quarter.

The Nasdaq composite rose 0.3%, adding to Tuesday’s 0.6% gain for its third straight up session. At 5,154.98, the Nasdaq is now up almost 3% year to date.

The S&P 500 edged nearly 0.2% higher, but the Dow Jones industrial average was slightly lower on the back of sharp declines by Boeing (BA) (down 2.2%) and Caterpillar (CAT) (down 1.4%). The former is reversing Wednesday’s gains after reporting an adjusted net loss of 44 cents a share in Q2 on a 1% lift in revenue, according to William O’Neil + Co. data.

Small caps more or less followed suit; the Russell 2000 eased 0.1%. Crude oil futures, in a slump all week, lopped off another 2% to $41.08 a barrel. Gold and silver moved higher.

Volume fell on both the NYSE and Nasdaq, according to preliminary data.

Celgene (CELG) gapped up at the open and rose 3% to 111.70, marking its highest close since Jan. 7. Before the open, the biotech reported adjusted earnings of $1.44 a share, up 22% in the second quarter. Net product sales rose 22% to $2.74 billion, while total revenue was $2.75 billion, up 21%.

Celgene also gave a bullish outlook for the rest of the year. It sees full-year net product sales of $11 billion, up from a prior target range of $10.75 billion-$11 billion. Its adjusted EPS outlook also increased to a range of $5.70-$5.75 from $5.60-$5.70. Celgene also boosted its adjusted operating margin forecast from 53.5% to 54%.

The stock earlier this week took back its 200-day moving average, an important development as the former big winner tries to end its long downtrend and bottom out. Last year in late July, Celgene had broken out of a later-stage base at 129.16 and got to as high as 140.72 before quickly turning tail. At this year’s low of 93.05, Celgene fell 34%, just within the maximum range allowed for an ideal cup base.

Given how long Celgene has been correcting, one should also keep an eye out for a potential saucer pattern to form. Learn more about this bullish chart pattern by reading this Investor’s Corner column.

Celgene gets an 80 Composite Rating from IBD Stock Checkup. That’s good, but not great. However, if the stock continues to climb, an improving Relative Strength Rating and Accumulation/Distribution grade could hoist the Composite score higher.

In the financial services industry, MasterCard (MA) sprang to its highest level in more than a month, rising 2% to 95.80 after the credit and debit card processor posted a 13% rise in Q2 profit to 96 cents a share. It was MasterCard’s second quarter of double-digit EPS growth in three quarters. Revenue lifted 8% to $2.59 billion.

Watch to see if MasterCard can keep rebounding and potentially surpass a 98.09 proper buy point. That buy point comes from adding 10 cents above an interim peak of 97.99 within a somewhat lopsided double-bottom base. In such a base, the stock encounters two distinct sell-offs, and in the second sell-off the stock undercuts the first low. In MasterCard’s case, the first low was 94.08 on May 19.

This base has formed within a larger consolidation in which MasterCard fell from a high of 101.76 to a low of 78.52. The 23% decline falls within normal range for most key chart patterns monitored by IBD.

IBD’S TAKE: In the stock market today, the Finance-Mortgage, Retail-Internet and Medical-Products industry groups helped lead the upside. You can check how all 197 industry groups and subgroups fared by looking at the entire list under the “Stock Lists” section on Hover over “Stock Lists” and then click on the “Data Tables” link.