E Edwards Lifesciences: Near-Term Techno-Fundamental Metrics

(b) Daily Chart Signals

Image Source: Investing.com

This chart shows that EW has closed below the 5-day EMA line, which is drooping. It suggests that the trend has weakened in the near term. The 5-day EMA level of $77.44 has now become the resistance level to track.

The middle Bollinger Band (default value of 20, 2) suggests that a near-term support level exists at $76.03.

The daily MACD (default settings of 26, 12, 9) Line has crossed below the Signal Line and it is a bearish near-term signal. A drooping MACD Line also suggests that the averages are steadily falling.

The MACD Histogram value is in the negative territory and its negative value is decreasing day over day, confirming that the near-term trend is negative.

(c) Option Chain

Image Source: NASDAQ

EW’s November 2020 option chain open interest suggests that there is an adequate supply of calls at $80 and $83.33. The premium on these calls fell on August 7, 2020, suggesting that supply exceeds demand. These call writers are most likely investors who are probably hedging their longs.

Summing Up

Though EW’s long-term prospects are exciting, the near term looks weak. The option chain data of November 2020 suggest that the stock can witness selling pressure at higher levels between $80 and $83.

Though the weekly charts suggest the stock is in strong hands, the daily charts suggest that it is looking weak and has support at $75.60 while its resistance is placed at $77.64.

Though the $368 million hit that the company will take after settling with Abbot seems to be discounted along with its flat 2020 guidance, I would watch out for another bit of news that can spell bearishness – the delay or flaws in Stimulus-2 because of political disagreements.

As I write this post, the Dow is up 220 points, but we all know that this is a narrow market and a few stocks will help the indices as the broader market suffers.

If I were a near-term trader, I would wait to see if EW breaks its resistance at $77.64. That would indicate a buy for 1–2% gains. I also would assume that the upside is capped somewhere in the $80–83 range.

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Disclosure: I have no position in the stocks discussed, and neither do I plan to buy/sell it in the next 72 hours. I researched and wrote this article. I am not being compensated for it (other ...

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Sunil Tinani 3 months ago Author's comment

Agree. When current growth is flat but prospects are great, one can always invest in a SIP

Mad About Money 3 months ago Member's comment

Interesting perspective. I had never really thought about it quite like that.