<< ....it did something similar in 99 and finally broke through near the end of the year. Is there something wrong with the story? >>
You have a keen eye, Greg.
And, you are spot on:
askresearch.com
I agree that MDT will not repeat this pattern endlessly. It is fundamentally a solid company with an excellent and improving future.
But note that six times in 1999 it moved into the crucial 36-40 area, and each time was beaten back. Of these, there were four separate times when it traded into the 40 region, again being turned back each time. When it finally did break out of this trading range after these attempts, it did so after first selling off sharply from 38 down to 32 for the last time, then immediately reversed dramatically on big buying pressure right at the beginning of January 2000. It then powered its way impressively through the then-crucial 40 resistance barrier on big volume like a hot knife through butter, leaving a professional gap and a string of bullish candles at that point in its wake.
But this has not happened as MDT reversed from its recent low to approach 57 now.
Still, as you imply, I fully expect this will be repeated. I just don't think it will be here. I suspect there will be a selloff on big volume down perhaps as far as 48. Then, I would probably strongly consider taking a long position at the first sign of reversal (Doji, oversold conditions, etc.), with a stop below 47.
But eventually, MDT will break through the overhead barrier, perhaps in another month or two. When this happens, it will be interesting to see if this multi-year pattern repeats itself at the next notch up. If so, I may just play along with it, long and short, unless and until the rules change........ uh, are changed.
And, along these lines, I don't know who's behind it all, but I suspect it may be Medtronic itself, at least in part. I have regular dealings with them at work, and I can tell you that they have very, very potentially lucrative employee stock option packages. Maybe they are in the business (common among big companies, as you know) of selling huge positions of call options to help finance these things, and so have a vested interest in keeping a lid on the stock price. Maybe they also help finance these stock option packages by engaging in the above long/short/analyst manipulation game. There's other possibilities, I realize, but I wouldn't be surprised if MDT itself were the force behind much of this.
Good pick up, my friend.
Regards,
WS |
