We last reviewed the charts of drug maker Mylan N.V. (MYL) at the beginning of May, and we boiled down our advice to: "If you can afford to risk below $34, I would probe the long side of MYL here. If short, I would cover. Add on strength above $41."
Prices held steady until the end of July when another round of selling knocked prices down to around $30. Our strategy was successful until it wasn't. No investment approach is 100% perfect. Now that the stock has readjusted to a new lower price level and has firmed the past couple of weeks, another review of MYL is in order.
In this updated daily bar chart, above, we can see the sideways trading range for MYL that lasted from October until the end of July. For much of that sideways span prices crossed above and below the 50-day and 200-day moving average lines. Currently MYL is below the declining 50-day and 200-day averages. As prices declined about $10 in early August the volume of trading surged.
The daily On-Balance-Volume (OBV) declined sharply in early August but has quickly moved to the upside. The early aggressive selling has reversed to aggressive buying. The daily Moving Average Convergence Divergence (MACD) oscillator crossed to the upside from below the zero line for a cover shorts buy signal.
In this weekly bar chart of MYL, above, we can see that prices have been in a downtrend since early 2015. Prices have been below the declining 40-week moving average line for the majority of the time of the past three years. The weekly OBV line has been up and down with the price action over the months and recently moved lower in the past two months signaling more aggressive selling.
The weekly MACD oscillator is in a bearish mode below the zero line. The two moving average lines of this indicator have begun to narrow and could lead to a cover shorts buy signal depending on the price action in the weeks ahead.
In this Point and Figure chart of MYL, above, we can see both the last decline from $39 to almost $29 and the subsequent stabilization. Prices recent made a small double-top breakout at $33.59 and there is an upside price target projected to around $38.
Bottom line: MYL may retest its recent lows around $30. If that happens and prices hold it could represent a good location for aggressive traders to go long MYL risking a decline below $29.