Ligand Pharmaceuticals Incorporated, a biopharmaceutical company, focuses on developing and acquiring technologies that help pharmaceutical companies discover and develop medicines worldwide. Its commercial programs include Promacta, an oral medicine that increases the number of platelets in the blood; Kyprolis that is used for the treatment of multiple myeloma; bazedoxifene, which is used for the treatment of postmenopausal osteoporosis; Nexterone, a Captisol-enabled formulation of amiodarone; Noxafil-IV, a Captisol-enabled formulation of posaconazole for IV use; Exemptia for autoimmune diseases; and Vivitra for breast cancer.
Take a look at the 1-year chart of Ligand (NASDAQ: LGND) below with the added notations:
LGND had been trading in a sideways move up until its breakout above the key level of $112.50 (blue) in April. If the stock pulled back, traders would have expected that same $112.50 level to act as support, and that is exactly what has happened, multiple times, over the past week or so. LGND should be moving higher from here, unless the $112.50 level breaks.
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The Tale of the Tape: LGND has a key level at $112.50. A trader could enter a long position anywhere near that level with a stop placed under the it. However, if traders are bearish on the stock, a short trade could be made instead on a break of the $112.50 support.
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