{"id":43033,"date":"2018-03-12T20:55:27","date_gmt":"2018-03-13T03:55:27","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=43033"},"modified":"2018-03-12T20:56:05","modified_gmt":"2018-03-13T03:56:05","slug":"dexcom-breakout","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2018\/03\/12\/dexcom-breakout\/","title":{"rendered":"Lessons from the DexCom Breakout"},"content":{"rendered":"<p>Five months ago, <a href=\"http:\/\/drduru.com\/onetwentytwo\/2017\/10\/05\/dexcom-danger-and-opportunity\/\" rel=\"noopener\" target=\"_blank\">I made the case<\/a> for bottom-fishing in DexCom (DXCM) following the news of competitor&#8217;s Abbott (ABT) product approval. The trade was looking shaky a few weeks later when the stock made a minor new closing low from that price collapse. <a href=\"http:\/\/drduru.com\/onetwentytwo\/2017\/11\/12\/t2108-update-171110\/\" rel=\"noopener\" target=\"_blank\">November earnings produced the catalyst to confirm the bottom<\/a>, and the stock was off to the races for a little over a month. <\/p>\n<p>Soon after the stock started drifting downward, an analyst downgraded the stock to underperform. The selling was enough to create <a href=\"http:\/\/drduru.com\/onetwentytwo\/2018\/01\/07\/t2108-update-180105\/\" rel=\"noopener\" target=\"_blank\">a breakdown below 50-day moving average (DMA) support<\/a>. I stopped out my position to preserve my remaining profit &#8211; concerned that the market&#8217;s response validated the analyst action. DXCM never traded lower even after cutting revenue guidance a few days later. After two months of additional consolidation, DXCM broke out today.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_43036\" aria-describedby=\"caption-attachment-43036\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2018\/03\/180312_DXCM.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2018\/03\/180312_DXCM.jpg\" alt=\"DexCom (DXCM) printed a very bullish breakout above its 200DMA on a 6.6% gain. A close of the September gap down is now within sight.\" width=\"550\" height=\"394\" class=\"size-full wp-image-43036\" \/><\/a><figcaption id=\"caption-attachment-43036\" class=\"wp-caption-text\">DexCom (DXCM) printed a very bullish breakout above its 200DMA on a 6.6% gain. A close of the September gap down is now within sight.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" rel=\"noopener\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>While the volume did not surge on the breakout, the move still looks bullish given the context: an on-going push to fill September&#8217;s massive gap down and the contrary buying pressure in the wake of a bearish downgrade and a somewhat disappointing earnings report. On Tuesday, DXCM will appear at the Barclays Global Healthcare Conference. I assume that investors are anticipating very good news.<\/p>\n<p>I received a reminder of a very simple lesson: the power of the confirmation&#8230;or the lack thereof. In this trade, I was too eager to preserve my profits ahead of confirming a breakdown. A confirmation would have been a lower close. I should have used my profit to buffer against the emotional urge to react with the crowd. Moreover, the stock was over-extended below its lower-Bollinger Band (BB) and thus over-stretched; the hurdle was high for the stampede to continue exiting the stock!<\/p>\n<p>Note well&#8230;DXCM&#8217;s breakout needs its own confirmation: a higher close.<\/p>\n<p>Be careful out there!<\/p>\n<p>Full disclosure: no positions<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Five months ago, I made the case for bottom-fishing in DexCom (DXCM) following the news of competitor&#8217;s Abbott (ABT) product approval. The trade was looking shaky a few weeks later when the stock made a minor new closing low from that price collapse. November earnings produced the catalyst to confirm the bottom, and the stock &#8230; <a title=\"Lessons from the DexCom Breakout\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2018\/03\/12\/dexcom-breakout\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[584,482,300,62],"tags":[1941,1942],"class_list":["post-43033","post","type-post","status-publish","format-standard","hentry","category-bollinger-band","category-breakout","category-health-care","category-technical-analysis","tag-dexcom","tag-dxcm"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Lessons from the DexCom Breakout - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2018\/03\/12\/dexcom-breakout\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lessons from the DexCom Breakout - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"Five months ago, I made the case for bottom-fishing in DexCom (DXCM) following the news of competitor&#8217;s Abbott (ABT) product approval. 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