Tuesday, June 8, 2010

New All-Time High for Dr. Reddy's Laboratories (RDY)

As I said yesterday, the trend for most stock markets is down right now, so it isn't a good time to initiate long positions. But it is a good time to watch how the "Salmon stocks" perform. Can they keep moving higher? Dr. Reddy's Laboratory did just that today, moving up over 4%. Here is a longer-term multiple moving averages chart showing that RDY continues to get support at the long-term averages and has an upward sloping 200-day exponential moving average. The second panel shows that a 7-ATR trailing stop would have kept you long RDY during its recent pullback and you would still be holding it today as it was making an all-time high. As I've said before, there are many exit strategies to choose from, and an ATR-based trailing stop is just one example.

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