When to increase a long position?

For now, I have two long positions: BMY and MYL. Both are drug companies. BMY is a low P/E leading company in oncology drugs while MYL will soon combine to the PFE generic arm to form the world leader of generic drugs.

Both companies are somehow immune from the US:China trade discussions.

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The first BMY position was bought while the company was dealing with the offer it made to buy CELG.

The second position was bought more recently.

We can see below that just after the volatility displayed by the Red arrows, which corresponded to ETFs having to adapt to the closing of the BMY/CELG deal, the price pulled back but attracted buyers. (Pink Arrows.) This is a good spot to add to a long position.

At the right side of the Figure (Green arrows,) we can see that the price sustained the general market drop rather well, but that investors stopped buying. This means that adding here is not a good idea.


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For MYL, the situation is slightly similar. We can see that around 17.5, large investors were very actively buying the stock. However, after two gap-ups, we can see at the right of the Figure that large players have not been adding to the long positions. I believe that this was due either to fear or simply because both BMY and MYL are part of ETFs that have had to see due to general market weakness.

As the market stabilizes, a good spot to add to the MYL long position would be on the $18 or the $17.5 support levels, but only if the EV pattern shows accumulation.

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