Novo Nordisk made quite the splash this year. Its diabetes treatment has the potential to turn into so much more, such as treating obesity and kidney disease. NVO stock also contained health benefits for swing trading portfolios recently.
Swing Trading Example: NVO Stock
The first venture of NVO stock above 100 this year (1) came after a 60%+ move from a long base in 2022. It was certainly deserving some digestion.
On the pullback, the stock initially looked like it was going to get support at the 50-day moving average line (2). Where it stopped that day coincided with a level of resistance around 93 that NVO stock hit multiple times over the previous week or so.
After spending some time below the 50-day line, the first move back above it gave us renewed interest (3). But it fell just short of crossing the level of resistance at 93. So we waited.
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The following week we added NVO stock to SwingTrader as it crossed that level even though it didn't close above it (4). But we got lucky with a news event the next day where a clinical trial was halted because the results were so good (5). We took the good fortune in stride and removed the first third of our position early in the session and benefited as the remaining shares lifted throughout the rest of the day.
Notably, the relative strength line also moved to new highs even before the price of NVO stock made it to highs.
Taking Profits Even More Important In Market Corrections
As NVO stock pushed above 100 to new high ground the Nasdaq composite hit resistance at its 50-day line. We took another third off after hitting a 10% gain from our entry (6). Sure we could pat ourselves on the back for having a winner that was bucking the market weakness. But greed doesn't usually serve your long-term profit interests. Especially in this case where market weakness was spreading even to the "Magnificent 7" that had propped up the indexes for most of the year.
The next three days seemed harmless enough as NVO stock held above the 100 level and just slightly closed below its 5-day line (7). But when the selling intensified on a gap down, we didn't waste time exiting the position (8).
One could argue for support at the 21-day line or the fact that the close was just barely below the 10-day line. But with a market correction looking imminent, it wasn't time to be a hero. Though NVO stock held the 21-day line the next few days, it eventually undercut that level and the 50-day line as well. As of Friday, it was back below its 50-day line and our entry. Rather than holding out for bigger gains, we took the gift we were given and logged over a 6% gain for the trade in under two weeks.
More details on past trades are accessible to subscribers and trialists to SwingTrader. Free trials are available. Follow Nielsen on Twitter at @IBD_JNielsen.
