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Edwards Lifesciences - Can't Keep A Good Stock Down Redux 
Wednesday, February 10, 2010
By Gibbons Burke
Shares in heart valve manufacturer Edwards Lifesciences (EW3) suffered a mild cardiac arrest in mid-January, breaking a very nice up-and-to-the-right trend from a low of $60.90 in September which brought the stock to a 52-week high of $94.55. The panic rout got worse this week, with the stock seeing 'very big' 3.0% declines last Thursday and again on Monday, with a 0.5% drop on Tuesday to close at $86.65, down a 'very large' 6.5% over the last five trading days. The recent acceleration of the decline managed to sink the shares below the lower Bollinger bands on Monday and Tuesday, triggering a signal which we have featured many times in the past (see the related ideas links below).
Q: How has EW performed in the past when it has closed below the lower Bollinger band on two successive trading days?
A: According to the 28 previous occurrences of this event, EventEdge indicates that EW has shown a somewhat bullish edge that peaks 27 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Tuesday, 9 February 2010) is Thursday, 18 March 2010. EW rallies in 86% of the cases (24 of 28) by an average of 9.0% relative to the close on the event date. The average of the 4 declines is -3.6%. The overall return of the 28 cases is 7.2%, which, based on the close of EW on the event date ($86.65), provides a target price of $92.89.
Click here4 to see this trading idea in EventEdge®, where you can see individual bar charts for each of the past occurrences, and change the event combination to include other relevant factors.
Gibbons Burke5 is editor of MarketHistory.com.
Related Ideas:
- Edwards Lifesciences Corp. - Breaking Out the Paddles6 - March 4, 2009
- Edwards Lifesciences - Can't Keep a Good Stock Down7 - February 15, 2008
- Edwards Lifesciences - Buy the Dip?8 - October 25, 2006
- Edwards Lifesciences - No Good Deed Goes Unpunished9 - July 27, 2006
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Let variable values:
@ = GII.EW.NYSE
theEvent = IF
@ is less than bollinger_low ( @, 20 units, 2 )
AND
1 value ago {
@ is less than bollinger_low ( @, 20 units, 2 ) }
THEN 1
ENDIF
Date Day t+1 t+5 t+10 t+20 t+22
11/01/2000 Wed 9.1 18.8 9.1 23.6 22.1
07/20/2001 Fri -0.5 8.0 3.5 9.9 9.2
09/18/2001 Tue -2.1 -11.1 0.5 4.0 5.6
11/16/2001 Fri -0.3 9.8 4.5 21.3 18.2
04/25/2002 Thu 0.6 4.8 0.5 -3.2 -3.0
07/02/2002 Tue 5.3 -4.0 4.1 16.7 15.0
07/24/2003 Thu 0.3 3.9 -2.4 6.3 3.8
03/10/2004 Wed -2.3 1.4 -3.3 6.1 6.8
07/02/2004 Fri -0.6 -1.9 -0.5 5.0 2.6
09/29/2004 Wed -0.0 1.7 -2.7 3.0 2.0
01/05/2005 Wed 1.4 1.6 3.6 2.5 2.9
04/15/2005 Fri 0.5 1.8 5.2 7.7 8.2
06/15/2005 Wed 0.2 -1.5 -0.8 -3.8 -5.2
07/15/2005 Fri 0.0 8.7 12.2 7.6 6.5
10/10/2005 Mon -1.4 -1.6 0.2 -1.6 -0.4
11/29/2005 Tue 0.4 5.1 4.5 4.9 4.4
07/26/2006 Wed 0.2 2.2 3.2 6.8 7.2 <- redux
10/23/2006 Mon 0.7 -1.0 -0.6 0.5 2.2 <- redux
04/25/2007 Wed 0.5 1.1 0.3 4.9 3.4
07/25/2007 Wed -0.6 -0.5 1.3 0.4 2.8
12/05/2007 Wed 1.2 3.2 -0.7 -4.3 -4.8
02/14/2008 Thu 0.5 1.0 2.4 3.3 8.0 <- redux
09/05/2008 Fri 1.7 1.1 6.8 1.2 -3.8
10/07/2008 Tue -1.4 -0.5 -0.4 -0.3 -2.8
11/20/2008 Thu 8.0 10.6 7.7 18.1 20.8
03/02/2009 Mon -0.4 2.3 13.7 14.5 12.6 <- redux
08/06/2009 Thu 0.6 1.9 0.4 -1.0 1.1
08/31/2009 Mon -0.3 3.7 6.3 13.0 11.5
02/09/2010 Tue NaN NaN NaN NaN NaN
Avg 0.8 2.5 2.8 6.0 5.6
AvgPos 1.8 4.6 4.5 8.2 8.0
AvgNeg -0.9 -2.8 -1.4 -2.4 -3.3
PctPos 60.7 71.4 71.4 78.6 78.6
PctNeg 39.3 28.6 28.6 21.4 21.4
Maximum 9.1 18.8 13.7 23.6 22.1
Minimum -2.3 -11.1 -3.3 -4.3 -5.2
StdDev 2.6 5.4 4.3 7.5 7.3
ZStat 0.3 0.5 0.7 0.8 0.8
Variance 6.7 29.1 18.4 55.6 53.2
29 Occurrences |
Comments:
Web Address of this trading idea:
Links:
2 http://www.markethistory.com/content/analog/analog.html?ticker=EW
3 http://quote.morningstar.com/stock/s.aspx?t=EW
4 http://www.markethistory.com/content/events/stocks/chart.html?ticker=EW&events=CloseBelowLowerBoll0,CloseBelowLowerBoll1&date=2010-02-09
5 http://www.markethistory.com/staff/detail.html?s=gibbons
6 http://www.markethistory.com/content/content.html/15526.html
7 http://www.markethistory.com/subscribe/best_of/content.html/13516.html
8 http://www.markethistory.com/content/content.html/9999.html
9 http://www.markethistory.com/content/content.html/9661.html