Greg,
I can't really explain it; no bad news, only good news. But the phenomenon seems to occur with regularity right before earnings. MDT reports Monday. It also occurs right before options expiration, which coincides with earnings reports every three months. There are also other months where this has happened, but always it seems right around options expiration. For example, this year it sold off in March, April, May, August, and now November.
But, what has happened in the past is that after the selloff, MDT rallies back up to the mid-50's over the next ten or eleven weeks or so, but only after finding a bottom, which in the past has taken about a month. After the bottom, it then ramps back up to the 55-57 level. So, I'll be looking for that bottom, at which time I'll look for a long entry. For the next several weeks, however, MDT should continue its downtrend, with probably a correction or two back towards its moving averages before it reaches a turning point.
askresearch.com
I'll be looking to close the position at 46, but I'll settle for 47.
Since it pierced the 20 day BB today, I'll look to close sooner rather than later, since it never stays down for long after piercing the lower rail of the 20 day BB:
askresearch.com
Speculation: today was options expiration. Could it be that MDT had a lot at stake here as a participant? For example, might they have sold a lot of calls which were in the money, that they wanted to see expire worthless? And/or, bought a lot of puts that it wanted to see expire profitable? I don't have any direct evidence that MDT plays these options games, but others (especially M$FT) certainly do, and maybe MDT finances their sweet stock option packages this way.
Hmmmmm............
WS |
