Frame your expectations and risk levels before jumping on Regeneron (REGN).
Discussed in this article: Regeneron Pharmaceuticals Inc. ( $REGN )
We’re going to take a quick look at Regeneron ( NASDAQ: REGN ). This was at a pretty big peak here, pretty far extended above the 50-day moving average. The thing that’s notable here is, yes, it’s fallen below the 50-day moving average, welcome to Wall Street most stocks are; except the yield on the ten-year treasury note.
The thing that’s notable about this is on Friday, when so many stocks were reversing or at least closing near their intraday highs, Regeneron ( NASDAQ: REGN was weak all-day; it came down almost two percent. I’m looking at this as a stock that really needs more correction. If you’re buying it at $215.00, if you think this is a great buying opportunity, it may very well be, but I look at this and I see resistance, I see a breakout right about where the 200-day moving average is. I could see this stock certainly going down to test $200.00; in fact I’m pretty sure it’s going to. I would be more interested in buying the stock when it’s actually fallen down to test be 200-day moving average, which is substantially lower.
So the words of advice that I would give you are, pick your points where you’re actually buying; just because you happen to be looking at a stock one day and really like it, that doesn’t mean that that’s the day or the time that you buy the stock. Be able to look at a stock, stretch out the chart, and say, “Okay, going forward, in September, October, November, December, if I am still holding this stock, will I look at this particular moment in time as being the best time that I could have bought this stock, that was a great buying opportunity?” Or if I’m still holding the stock, and who knows, it could be up higher, maybe not, but it could be. Will you look at this and say, “You know what? I should have waited, I should have been a little patient, bought the stock here in August or September, after it was done correcting, or after it was done forming a bit more of a high base.”
This is really how I see this stock progressing; I don’t know if it actually will and there’s risk management that you’ve got to do every day or every week that you own this stock. This really looks more like a viable pattern to me, than this one, okay, which is what you’re expecting if you’re buying this stock right here, right now. So be able to draw these patterns, look at it and see, and I do this a lot, if I’m looking to buy a stock I understand that this is what I’m doing, I’m drawing a box here and I’m saying, “Do I think that this stock will not ever come back into this box?” Because if I think it’s going to come into this box then I need to wait. If I don’t think it’s going to come into the box, then fine I go ahead and buy it. By the way, come into the box when, during the time that I own the stock.
For example if you’re buying the S&P 500 ( INDEXSP:.INX ), if you buying the SPY ( NYSEARCA:SPY ). If I’m buying now then I’m drawing this box and I’m saying, “Do I think maybe the S&P ( INDEXSP:.INX ) is never going to fall into this box?” Now let me say it a different way, do I think the S&P ( INDEXSP:.INX ) will not fall into this box between the time that I buy it and the time that I intend to sell it? In the former question, no, I think the S&P ( INDEXSP:.INX ) will ultimately fall into this box. The latter question, will it fall into the box before I intend to sell it? No, I’m looking at this box as one that we’re probably not going to see for a day, or two, or three; probably a little bit more of a move up and then perhaps a rollover. So as far as my profit potential, now what I’m saying is, if I’m buying this stock right here, right now, which box do I expect the S&P ( INDEXSP:.INX ) to move into first, this one, or this one? I don’t know how far it’s going to move up, but I vote that the stock is going to move up into this box before it moves down into that one.
You’ve got to be able to craft a trading plan similar to that on every single trade that you’re going to make. I promise you, you’ll make some more money.