I’m a little late with this BLOG posting on DXCM. Today’s action delivered an awesome trading opportunity, and I took advantage of the swoon for my own account. I am hoping others reading this coverage did as well.
DXCM has been trending water of late at about $17- only providing mini pullbacks for accumulators. Today, the company announced year end numbers, and 4th quarter losses were a little higher than expected.
Those who follow this one along with me know the investment has nothing to do with the numbers- it’s all about the company receiving an FDA Approval on its wireless blood glucose monitoring device. Analysts who follow the company believe the FDA Approval will come at around the end of March.
The weaker than expected numbers pushed the stock down in the early trading. However, since it was trading down on very light volume, I knew it would be a good buying opportunity. Here’s the chart I was looking at:
As I watched the stock drop on light volume, I placed a limit order to buy if the stock hit the $16.30 mark- a perfect 61.8% retracement.
I ended up buying within a penny of the low trade of the day- this rarely happens, so I’m feeling pretty good about it.
I figured it might hang in this range or even go lower. However, apparently I am not the only one looking for a 61.8% retracement. The stock only traded below $16.50 for about an hour, then it turned around and headed straight back up. As I write this BLOG, DXCM is actually showing a $.44 gain on the day at $17.38.
Fortunately, I was able to execute a great trade. Unfortunately, I didn’t post this BLOG in time for anyone else who wanted to act and didn’t see the action in the stock.
My position is now 7,000 shares at an average cost of $14.71. Looking to go to 10k shares if the market allows between now and the announcement of an FDA Approval. If they get the approval, I believe the stock will trade at about $25.
There is still plenty of upside, but pullbacks are short lived with this stock. When a stock trades down on light volume like this, and pulls an abrupt U turn- you know it is under accumulation by big money.
It’s still risky- the market is pricing in the FDA Approval, and if it gets denied the stock will probably be cut in half.
However, I am betting they will get it. Comments and questions are welcome.