Lannett Company, Inc. develops, manufactures, packages, markets, and distributes generic versions of branded pharmaceutical products in the United States. It offers solid oral, extended release, topical, nasal, and oral solution finished dosage forms of drugs that address a range of therapeutic areas, as well as ophthalmic, patch, foam, buccal, sublingual, soft gel, and injectable dosages. The company provides its products for various medical indications comprising glaucoma, muscle relaxant, migraine, anesthetic, congestive heart failure, thyroid deficiency, dryness of the mouth, gout, bronchospasms, hypertension, and gallstone. It also manufactures active pharmaceutical ingredients.
Take a look at the 1-year chart of Lannett (NYSE: LCI) below with the added notations:
LCI has been trending lower for the past 8 months, but over the course of the last 12 months the $40 price level (blue) has become very important to the stock. Not only was the $40 level a support area back in December and January, but that level was also support again in October. Once LCI fell below that level, $40 was hit as resistance at the end of November.
Join our new Linkedin Group by clicking the link below:
The Tale of the Tape: LCI has a key level at $40. A trader could enter a long position on a break above $40 with a stop placed under the level. However, if traders are bearish on the stock, a short trade could be made instead at the $40 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
Follow me on Twitter: @cmtstockcoach