8.2 C
New York
Thursday, March 28, 2024

Saved by the Bell! (ISRG)

ISRG Review & Analysis by my friend David Gordon:

Saved by the bell!

 

Long time readers recognize that I view trends differently than most chart readers, including how and when trends die and reverse. For example, there was my recommendation to sell 1/2 of our position in Intuitive Surgical/ISRG at ~$335, while Wall Street (Jim Cramer included) were ga-ga for the shares. Although not explained at the time, one perception I employ is the difference between the momentum, price, and breadth high prices. (And vice-versa for the low prices.) Market watchers will recognize these chart points as double, triple, and head & shoulder tops (and bottoms); I prefer to sell during the momentum high but purchase during the breadth low.

Well, the price and news from yesterday verged on the need to liquidate the remainder of the ISRG position, but as this post’s topic header has it, the position was saved by the bell. First, the ‘news’ that the company’s CEO stated during a conference yesterday morning that slower growth and lower margins for the company loomed dead ahead, which caused traders and investors to sell hard, was later refuted to be rumor. Then the share price closed spot-on at multiple levels of support (200 day sma included) that set up the possibility for a downside price gap on today’s open. After the markets closed, however, came news that Intuitive Surgical/ISRG will become a member of the S&P 500 index, which news typically causes index funds to purchase immediately the shares of the new addition. Intuitive Surgical/ISRG shares reacted accordingly to the sudden onslaught of buy orders by surging to ~$287, and continue near that level this morning in pre-opening trades.

But how likely will ISRG be to hold these levels, and not turn lower once again? Remember that the shares have merely reversed, at worst temporarily, and not broken above any levels of resistance. For that preliminary answer, we investigate how strong are the hands that buy and own the stock at this level…

[click on each chart to enlarge]

The chart above shows volume at price (left scale) and on balance volume (bottom scale), two technical studies that measure the accumulation or distribution of the total volume. Neither study involves price, etc, which makes each study an excellent secondary analysis. (Explanations of these studies and how to use them can be found in this blog’s archives, or elsewhere on the web.) For the record, I see accumulation, despite the past 8 months of sideways price activity.

For a closer-in look of the activity this morning, I use…


… which also betrays steady and powerful accumulation. Contrary to yesterday’s rumor, comes this real news…

Cowen says that presentations at the American Urological Assn this week point to expanding use of Intuitive Surgical/ISRG‘s da Vinci system for more types of surgery, potentially raising addressable U.S. urology procedures by 23% and the total addressable U.S. mkt by 6%. Cowen analysts also saw strong interest from urologists in broadening daVinci use beyond prostatectomy, increasing their confidence level in their 63% and 49% procedure growth ests for 2008-09. Firm sees potential upside in their 2008 sales est, and reits their Outperform on ISRG.

New investments of Intuitive Surgical/ISRG, even at ~$280, could prove timely; perhaps equally as timely as my recommendation to buy during the last primary base at ~$85.

Full Disclosure: Long Intuitive Surgical/ISRG

 

Comment Section:

David:

Reuters/Forbes continues to issue a "news" release stating that a Cowen analyst is reporting lower revenue guidance by ISRG. This information was supposedly disseminated at a company conference. They released again Sunday. ???

http://seekingalpha.com/article/…? source=reuters

 

Gravatar Good morning, Daniel,

I am unfamiliar with Donald Johnson. I checked his website (http://www.businessword.com/) rather than SA to confirm no transcription error occurred; none did.

1) I share Johnson’s concern re tighter credit conditions as a potential disruptor to ISRG’s revenue stream;
2) I mentioned the rumor (re revenues) in my post;
3) That rumor of lower revenue guidance of ~$850 million (vs $873 million) began during a Citigroup conference call; Eli Kammerman, the Cowen analyst uttered nothing even remotely similar. Meanwhile, ISRG continues to guide gross margins to be in the 69% range;
4) Later that morning, Deutsche commented on the rumor that the company reduced guidance, noting that ISRG did not change guidance and the consensus estimates have always been above the company’s guidance. (Emphasis mine – dmg) After Duetsche’s comments hit the wires, ISRG’s share price stabilized, and even began to climb… only to fall back into the close and a near breach of support.

I do not share Donald Johnson’s perception that "the daily and weekly charts of ISRG shares are bearish"… even if the share price were to decline to $240. Heck, I see primary (L/T) up trend support at $235-225, anyway, although I prefer multiple levels of support at ~$275 continue to stem a deeper decline to maintain the sanctity of the internal up trend, and the (presumed) intermediate term base.

Thank you for sharing your thoughts. I hope my reply helps.
 

 

 

     

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments

Stay Connected

157,453FansLike
396,312FollowersFollow
2,280SubscribersSubscribe

Latest Articles

0
Would love your thoughts, please comment.x
()
x