3 Things to Watch While Collecting a 9.5% Dividend
- Posted by Greg Harmon
- on June 13th, 2012
PDL BioPharma, $PDLI, has been in a long upward trend since getting whacked the 3 years heading into the financial crisis. Currently the stock of this $900 million biotech looks good on multiple timeframes and is starting to move higher. It also pays a 9.5% dividend while you wait for that movement to happen. Nothing wrong with buying it here but there are three things to watch for to keep you in the stock or better time an entry. Take a look.
PDL BioPharma, $PDLI, Monthly
The monthly chart above shows the clear trend higher since bottoming in 2009. In November it moved above its 200 month Simple Moving Average (SMA)and is now above the 100 month SMA as well. The thing to watch on this timeframe is the Relative Strength Index (RSI). It has been moving in a tight rising wedge and is near the top of that wedge. A move above the top would be great but continuation within the wedge is fine too. What you do not want to see is a move below the wedge and under 50. That would be a sign to get out. That can take some time though so a shorter term view on the weekly chart can be useful as well. This one has the Fibonacci retracements marked out. Notice that it has been struggling with and just recently moved over the
PDL BioPharma, $PDLI, Weekly
38.2% Fibonacci retracement from the 2006 high to the 2009 low. Rejection lower at this level would be a second red flag to watch for. Finally, the daily chart below shows the most recent price action. Price has been moving in a rising channel and is approaching the top of that channel. A rejection lower is not the end of the world, and in fact might provide a better entry near the 50 or 100 day SMA’s. But a break over the top must be bought and it looks to have some support to do so. The RSI is rising, the Moving Average Convergence Divergence (MACD) indicator is is crossed to positive, the Bollinger bands are expanding higher, and the volume picked up Wednesday as it moved to a new high.
PDL BioPharma, $PDLI, Daily
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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