Quest Diagnostics Incorporated (DGX) shares briefly broke out from trendline resistance after the company announced that it would launch a coronavirus testing service beginning on March 9, 2020. The molecular diagnostic assay that detects viral RNA is pending review by the Food and Drug Administration under the Emergency Use Authorization provision.

The announcement came shortly after representatives from Quest Diagnostics, Laboratory Corporation of America Holdings (LH), Thermo Fisher Scientific, Inc. (TMO), and Abbott Laboratories (ABT) met with White House officials to discuss their progress in developing tests for the coronavirus. On the same day, Vice President Mike Pence said that coronavirus testing was added as an essential benefit for health plans.

Aside from the coronavirus testing efforts, Quest Diagnostics has been a robust performer. The company reported fourth quarter revenue that rose about 5% to $1.93 billion and beat consensus estimates by $10 million, as well as non-GAAP earnings per share of $1.67 that beat estimates by $0.07 in late January. The company's 2020 guidance also came in higher than expected.

Chart showing the share price performance of Quest Diagnostics Incorporated (DGX)
TrendSpider

From a technical standpoint, Quest Diagnostics stock broke out from trendline resistance to fresh 52 weeks highs. The relative strength index (RSI) remains near neutral levels with a reading of 59.07, while the moving average convergence divergence (MACD) is on the verge of a bullish crossover. These indicators suggest that the stock could have more room to run ahead.

Traders should watch for consolidation above trendline resistance at $115.30 over the coming sessions. If the stock fails to break out, traders could see a move back into the previous trading range, with trendline support near the 200-day moving average at $103.52. If the stock breaks out, traders could see a move to fresh 52-week highs.

The author holds no position in the stock(s) mentioned except through passively managed index funds.