All-Time High Stocks: Two stocks at All-Time Highs Today (RDY and SAM)

Dr. Reddy's Laboratories and Boston Beer Co. are both hitting new highs today. For each stock I've shown a Guppy multiple moving average chart that includes short-term moving averages (red lines), medium-term moving averages (black lines), and a long-term 200 day exponential moving average (blue line). Both of these stocks have been in strong uptrends since 2009. A primary 'buy signal' was apparent when the red lines moved above the black lines (April 2009 for RDY) and a confirmation signal occurred when the slope of the 200-day EMA turned positive (around June 2009 for RDY). Since then, buyers have stepped in every time there was a pullback as indicated by the red lines bouncing off of the black lines. RDY has tested the longer averages a lot more recently, which could be the formation of a base (followed by a breakout higher, like today) or the start of a rolling top. One can never know the answer in advance, which is why I included the second graph of price and a trailing stop. The trailing stop is based on the Average True Range of the price so it takes into account the volatility of the stock. I typically like to trade strong trends that last from months to years so I set a fairly relaxed stop at 7-ATR that prevents me from getting 'shaken out' of a position during a pullback. I've arrived at the number 7 through trial and error and it is somewhat arbitrary.

I Recognize that moving averages and trailing stops are lagging indicators derived from price. I use them anyway because, to me, the point of using them is to help distill the 'message' out of the market's 'noise' and enable my trading decisions to be as simple as possible. Hence, my approach is based on a simple but selective stock screen (52-week and All-Time Highs), fairly simple technical analysis (Guppy charts, moving average slopes), and simple trailing stops.