Teva Pharmaceutical Industries Ltd (TEVA)

[JLS]

Two reasons for TEVA's drop:

1) The biotech sector, XBI, was down sharply (~35%) from the beginning of September of last year till late December of last year, and:
2) TEVA was being squeezed by a very high debt load which really needed to be refinanced.

Why things look better for TEVA now:
1) That refinancing was just finalized, so its financial condition is improved.
2) Looking at only the last 6 trading days, XBI declined significantly and all six candles had red bodies; but on a relative basis, TEVA traded much better during those days (per bottom chart).
3) On the last day, XBI formed a Southern Doji, meaning there was overall indecision but there were more bullish trades than bearish trades. That long lower shadow is signalling that XBI (and therefore TEVA) really wants to reverse and go higher.
4) Finally, the first chart below illustrates XBI's Sup/Res levels, and it shows that XBI is sitting on a ton of support at $84; and that will support the reasoning that TEVA should also go higher as there is no reason why it should not follow XBI higher.




This bottom chart (above) shows that TEVA could easily stall at $15.70 and $17. In other words, it will likely trade in a channel for awhile. That's why we trade (and not buy-&-hold).