Beat It

Beat It

February 8, 2017 Off By Chuck

One of my favorite medical stocks Biotelemetry (BEAT) provides cardiac monitoring systems and cardiac core laboratory services across the US. They went public opening trading just above $17/share in Mar 2008 just before the market melted down. They found a bottom in July of 2012 at $1.85, some 90% below their IPO. Since then the ride has been just as crazy as they have risen almost 1200% since then, riddled with plenty of volatility to test an investor’s staying power.

I have actively been looking for a time to enter as the chart above looks as if it has a lot more upside … eventually. Buying now is not in the cards for me. Even though price has been staying nicely above a rising 200 day moving average, it is butting up against the top of a rising wedge pattern while concurrently creating negative momentum divergence. The school of hard knocks has taught me to avoid “opportunities” that share both of these negative characteristics. As such, I will wait for the pullback I expect to occur out of the wedge. Why? The downside target if the pattern plays out (and potential loss if I enter now) is back down around $13, more than 40% from where it closed today. The upside opportunity, is not worth the downside risk.

If I am wrong? It isn’t the first, nor will it be the last time. Opportunities are like buses though, hang out long enough and you will be able to catch the next one.