Trapped Longs – EW

On October 09, 2012 Edwards Lifesciences (EW) dropped 21% after the company lowered guidance warning that austerity measures in Europe and lower insurance reimbursements in the US would hurt Q3 sales.

The company threw hopeful bulls a bone, with CEO Michael Mussallem saying they “anticipate a strong rebound in the fourth quarter” 

Sounds like a slope of hope to us. From our experience, it is safer to listen to what the stock says, than what company management says.

Noting the gap overhead, and knowing how the market hates a void, our bet is the stock wants to fill its spring 2012 gap @ 74 before it tries to workout the giant hole it just left in investors pockets above.

We see a lot of trapped longs and doubt they will be hanging around to see if Mr. Mussallem’s reassurances of a Q4 rebound bear fruit in this market environment.

We rate EW Red in the Bikini State and we will start building a new SHORT position Monday.

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3 thoughts on “Trapped Longs – EW

  1. bikinianalytics Post author

    They are a type of volume bar. They show volume by price rather than the traditional volume for day. Green is total up volume and red is total down volume in the price range.

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