Will Gilead Sciences Lead Us To the Promised Land?

There was reportedly little substance to talks yesterday between Canadian Foreign Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer, who are scheduled to meet again this morning. The U.S. side apparently made it clear that the deadline for an agreement in principle is Friday, with no wiggle room, and noted that they’ve already compromised on the issue of the sunset clause, a major sticking point for Canada.

Let’s consider Gilead Sciences. (Ticker: GILDWealth Strength IndexAAPL is Extremely Up and trending Up):

The VantagePoint platform recently indicated upside momentum.

Using the predictive indicators embedded within the VantagePoint platform and its predictive AI technology, we will point out four significant things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black simple moving average on August 28th .  We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the GREEN on August 24th.  This indicator measures strength and weakness for a 48-hour period, in this case strength.  The move to the GREEN position further makes the case for a potential bullish scenario. We also have the predicted high and low above yesterday’s actual high and low indicating further strength.  Finally, we have all three predictive differences positively sloped and the short and medium term ones are above the zero line.  I want to play the VP continued bullish indication.

Strategy Discussion

For active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking an active, premium debit approach may be the best path to success.

Because of the reasons given above, the purchase of a debit call spread may be one way to approach this situation.  You will first want to calculate your target strike.  In order to do this, you will need three pieces of data:  current price, expiration date and the implied volatility associated with that expiration date.  For GILDWealth Strength IndexAAPL is Extremely Up and trending Up, that yields a target strike of ~$78.5.  You may want to consider the GILDWealth Strength IndexAAPL is Extremely Up and trending Up September 21st regular monthly expiration 77/78.5 call spread, buying it for $0.37.  The most you can lose is the premium paid and the most you can gain is the width of the spread less any premium paid.  Max risk = $0.37 and max reward = $1.13. This means that you are getting odds of 3.05:1.

Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.