Mylan Inc., a pharmaceutical company, develops, licenses, manufactures, markets, and distributes generic, branded generic, and specialty pharmaceuticals worldwide. It operates in two segments, Generics and Specialty. The Generics segment primarily provides generic or branded generic pharmaceutical products in tablet, capsule, injectable, or transdermal patch form, as well as active pharmaceutical ingredients. The Specialty segment manufactures and sells branded specialty injectable and nebulized products comprising EpiPen Auto-Injector for the treatment of severe allergic reactions; and Perforomist Inhalation Solution, a formoterol fumarate inhalation solution for the maintenance treatment of bronchoconstriction in chronic obstructive pulmonary disorder patients.
Take a look at the 1-year chart of Mylan (Nasdaq: MYL) with the added notations:
Over the last 6 months MYL has formed a key level of support at $45 (blue). In addition, the stock has created a down trending resistance (red) starting from the beginning of March. The stock has just recently tested the support and may be on its way back up to resistance again. At some point, MYL will have to either break support or break its trendline.
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The Tale of the Tape: MYL has formed a key support and down trending resistance. Long trades could be made on either a pullback to $45 or on a break through the down trendline. Short trades could be made on a break of the $45 support level or on a rally up to the down trending resistance.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
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