Here’s your trade on On Holdings ($ONON), and a look at my On Deck list – January 3, 2025
Dan Fitzpatrick here at StockMarketMentor.com. I’m looking at Boston Scientific ( NYSE: BSX ) today.
I haven’t looked at this stock in ages, in a long time. I don’t see any notes that I’ve ever made on this so this is a new one for me, but this isn’t a new pattern for me. What you see here is a stock, let’s look at the weekly chart. You can see this has been on a long climb this whole year.
This is up 65 percent, it’s up a lot this year, from 55.00 to 90.00. It’s floating along the 50-day moving average, which I like. This is not a stock here that I think is setting up to where all it’s going to take is one little push higher. It might, but what I want you to do is, keep track of how it behaves along the 50-day moving average.
We’ve got a line here that I’m drawing, this is trending lower here. I want to see if this thing can pinch a little bit more. Volume has been below average, which is actually what you want to see during consolidation. You don’t want to see super high volume when a stock is consolidating. You want to see sleepiness where buyers and sellers are generally in agreement on where the price should be, so they are selling in a general area.
Then you want to see suddenly something snaps and everybody goes, whoa, wait a minute. Buyers are saying, wow, this is cheap, I’ve got to get all I can get. And sellers are going, wow, everybody’s coming for my stock. I need to get more money for it than I’ve been offering, and so they start lifting their offers. So the offers are lifted, and the bids are lifted. They start grabbing all the stock that they can, and then off to the races. But you need the proper setup for that.
Now, you look here at this big massive volume bar, this is like three times the average volume right off the 50. The only way I look at this is that institutions are buying this stock. With this kind of volume here coming down to the 50-day moving average, this is institutions saying thank you very much, I’ll take all I can get.
When you see this, this is a positive sign, we’ll just put it that way. This is a real positive sign that institutions are buying this stock. For you and me, the P/E doesn’t matter, nothing matters, and the fundamentals don’t matter. Revenue growth, earnings per share, profit margins. None of that stuff matters. It doesn’t matter to you, it doesn’t matter to me. I’ve never bought one stock based on its price-earnings ratio.
I’ve never bought one stock based on its growth. I buy stocks based on the charts, but I find the stocks by looking at the fundamentals. And this is why because I know that’s what institutions care about. A lot of institutions really don’t care about the charts. And frankly, when they’re big enough they don’t have to care about the charts because they are the chart, what they do moves the stock.
Listen to me here, I’m giving you pearls. I look at fundamentals as a way to find out, to find where the institutions are looking because I want to be looking in the same place that they’re looking. If I can see the pile of stocks that they have on their workbench if I can see all of those stocks that they’re looking at, they’re not buying them all, but they’re all attractive because we know what institutions like, at least I do.
We look at those stocks and then we simply go, okay, we had over 6,000 to choose from, now we’re down to 20 or 30. Let’s go through those charts and see now which ones are the institutions actually buying, that’s when the chart comes into play, and really that’s all I care about. If I see this kind of a pattern I can go look at the chart.
Let’s go look at MarketSmith or now as they call it, MarketSurge. Here’s Boston Scientific ( NYSE: BSX ). What is the daily chart? What are the fundies? Blue is good, we like blue. The top line here, earnings, versus the same quarter the prior year, it’s up 22 percent, 19 percent, 17 percent, 26 percent. So earnings per share are jumping every quarter, it’s accelerating.
The same thing on sales 15, 14, 14, 19. Look at the gross margins, close to 70 percent, very, very steady. It’s growing at 13 percent per year. The P/E, oh my god, the P/E is 38, that’s 1.5 times the S&P. Do you know how much I care? Not at all, I couldn’t care less about that. I look at this kind of stuff, this is all fundamental stuff.
I can go over to the weekly chart, and okay, what does their earnings per share curve look like? This is perfect, you like to see this kind of move. By the way, you can look here, you want to see how accurate this stuff is. The earnings profile actually started to move up right here. Right around here was the first time, you actually didn’t see an improvement here, you wound up seeing it here, but the stock anticipated it back here it started to move up.
Stocks actually anticipate or discount future fundamental developments. My point to going into all of this is to say, none of it matters if the chart doesn’t work. So you sift through the fundamentals, I have scans and screens that I have on my Stock Watch product, you can check that out on Stock Market Mentor.
Once I find this list of stocks, then I don’t care about the fundamentals anymore. All I care about on this one is what I see here. When I see this, that gets me interested. By the way, when I see this, it gets me uninterested because it’s followed by this. This was a big massive down day, though all it needed was another buck or so, another 75 cents and this would have been an up day.
But it was a down day on massive volume followed by even more volume, not more volume but high volume the next day as well. So this gets me uninterested, and then this big one gets me interested. Now I’m really interested in the stock, I just want to see how this works for a while.
Earnings are at the end of the month, so they’re a month away. I want to see how this stock starts acting over the next week or two. Remember what the market surge chart was showing us, we could very well see the stock start to trickle higher again in anticipation of those earnings and that’s when I want to be there.
I want to be a buyer there, and so what I am actually going to do for me is, I’m going to set a price alert just like right at this trend line so I’ll get the heads up if it pushes through. I set these little alerts here on the low end of the range so I can track this without being obsessed with it. If you look at a chart long enough you’re going to do something stupid, it happens every time.
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