Diplomat Pharmacy, Inc. operates as an independent specialty pharmacy in the United States. The company stocks, dispenses, and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. It also provides specialty infusion pharmacy, patient care coordination, clinical, compliance and persistency program, patient financial assistance, specialty pharmacy training/consulting, benefits investigation, prior authorization, risk evaluation and medication strategy, retail specialty, and hub services, as well as clinical and administrative support services to hospitals and health systems. The company’s primary focus is on medication management programs for individuals with complex chronic diseases, including oncology, immunology, hepatitis, multiple sclerosis, HIV, specialized infusion therapy, and various other serious or long-term conditions. Diplomat Pharmacy, Inc. has seven pharmacy locations in California, Connecticut, Florida, Illinois, Massachusetts, Michigan, and North Carolina.
Take a look at the 1-year chart of Diplomat (NYSE: DPLO) below with my added notations:
Over the last 8 months DPLO has been trending consistently higher, while also forming a nice trend line of support (green). Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its relevance. As you can see, the market deems DPLO’s trendline to be very important. A pullback to that line will provide trading opportunities, one way or another.
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The Tale of the Tape: DPLO has a trend line support to monitor. A long position could be entered on a pullback to the trendline, with a stop placed below the level of entry. A short position could be entered if DPLO were to break below its trendline.
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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