Abiomed is facing a liquidation and run for the hills by momentum investors who piled into ABMD shares on the gap-up and run higher back in August after an impressive earnings report. The liquidation is on news that one of the suppliers to the pacemaker industry cut back forecasts and it set off a stampede for the exits.
Abiomed makes heart pumps but they don't make a lot of money yet, only $0.20 in the last quarter (down from $0.28 last quarter and $0.30 the quarter before), so it was a whopping 130 times annualized earnings at the recent high this summer.
The stock is pulling back to a VERY IMPORTANT price level where the bulls were ALL OVER the shares on the way up. So guess what!? If they aren't there ready to buy on the way down, then this stock has a ways to go down, perhaps to $68 or $60 where there were plenty of trades (see the mountains of volume on the right scale where the arrows are pointing?) that took place through spring and summer.
Stocks are really just commodities in the short run, impacted by short term buyers and sellers who are doing everything they can to make a buck from trying to figure out what is going on. In the long run stocks are going to go along with the current of the stream of earnings and rise and fall with the fortunes of the company.
Technical analysis really helps you PINPOINT levels where you can take a stand in a stock and put on a trade, assuming that you are buying in front of and WITH other major buyers. If, however, you don't see strong relative strength in ABMD at the 81.5-81 level, then don't be a hero and back away. There will ALWAYS be another time you can take a trade.
Due your due diligence and keep learning. If you have any questions - PM me or type a question below.
Tim 11:51PM EST 10/6/2015 ABMD 83.72 close today 78.98 stop 90.12 upside target. 81.50-81 entry.
أغلقت الصفقة: تم الوصول لوقف الخسارة
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Tight stop didn't pan out. Will try again in a few days. Monitor closely.
التعليقات
timwest
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Trying again if it goes over the top of a previous day's range. I used the 1 year average range of 2 points for my stop before instead of the 11-day average of 5. 5 points would have kept us in the trade. But either way, I was fine taking the smaller-point stop because that support should have held and it didn't. So, longer term, that is a very bad sign technically. The buyers aren't as strong as I thought they were.
IvanLabrie
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Nice move up so far, but against resistance. Maybe gap up then short today? It's right under the mode above.
timwest
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This trade worked nicely, but then on the next earnings report ABMD got SLAMMED. It's important to watch the way stocks act around KEY LEVELS to let you know what is going on under the surface. ABMD had trouble when it broke support and ultimately was the indicator, the leading indicator, for them to miss on earnings.
timwest
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NOTE THE KEY EARNINGS LEVELS ON ABIOMED
timwest
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See how well the GREEN TRIANGLE defines the important level for the stock?
Copywryter
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No, actually I don't. What does this mean?
vaicru
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Too early to go Long.
I will wait 71
timwest
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I don't think it is too early. It also fell to the KEY EARNINGS LEVEL and is holding so far. Today's inside day is constructive also.