EXEL - nice LONG setup for a great biotechnology company

Exelixis is a biopharmaceutical firm that discovers, develops, and commercializes treatments for cancer. It has very strong fundamentals. It’s Net Margin is 49%. And it is traded at x17.7 Price-to-Free-Cash-Flow. That is not cheap. But I like that company a lot. Its return on capital exceeds 60% and it does not have debt. 

I count the rally off Dec 2014 low as an unfolding five wave up structure. The top made in October 2017 is the top of the wave ( 3 ) up. Since then we have seen a corrective looking decline in the wave ( 4 ) down shaped as (A)-(B)-(C). That corrective structure bottomed in October 2018. The decline bottomed at 66.7% retracement of the wave ( 3 ) up. The gap up off that low looks very promising and indicates that the new rally most likely has begun.

We should expect another wave ( 5 ) up shaped as (A)-(B)-(C). The first leg up in wave (A) of (5) normally can not break out over the top of the wave ( 3 ) up. But at least it should get to 25 – 28 area. 

EXEL - Daily chart updated on 17 November 2018