Friday, February 1, 2013

Feb 01. MYL, Upside Triangle Breakout.

Looking for long candidates satisfying my requirements in the Healthcare sector I have paid attention to Mylan Laboratories (MYL) – the generic drug producer.

This is the medium-term 0.25x3 60 min chart. MYL is in the strong medium-term uptrend since July. The fact, that the price has overshot the 25.75 target from the June low and not wasting any time reached to new highs, underscores the underlying strength. Not far from the 29.25 target from the horizontal count from the May – June bottom the price moved sideways forming a consolidation pattern. During this consolidation the price printed higher lows indicating the increasing demand and thus forming an Upside Triangle pattern (green lines). Today the price broke out of this Triangle to the upside generating a strong Triple Top buy signal (lime box).
To estimate the upside potential of this breakout we have to switch to the 1-box reversal chart.

The horizontal count from this Upside Triangle points to 32.25. I bought March calls on the breakout today.

Bought to open MYL Mar13 28 Call 10 contracts at $1.28.

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