Prescription for a Fall
- Posted by Greg Harmon
- on October 22nd, 2012
Many are jittery about the broad market but individual stocks are sending some clear signals. Two in the healthcare space are writing a prescription for a move lower, Express Scripts, $ESRX and Allscripts, $MDRX.
Express Scripts, $ESRX
Express Scripts, $ESRX, has been consolidating after a long run higher but is showing symptoms of a pullback. The Moving Average Convergence Divergence indicator (MACD) has been running negative for almost 2 months, with the Relative Strength Index (RSI) trending lower as well. Now the price, the most important piece, is testing support for the third time and from a lower high. Look for a break of 62 to start the next leg lower with a gap to fill to 56.83.
Allscripts, $MDRX, has a similar story. The MACD has just crossed to negative and the RSI is pulling back from a technically overbought condition. The 200 day Simple Moving Average (SMA) has been driving price lower and has now filled the gap and continues. Look for a break of support from the previous flag at 12.80 to retrace to 11.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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