Shares of medical devices maker Boston Scientific Corporation (BSX) took on a decidedly more bullish posture in November and December thanks to the lift in the broader market. Now, active traders and investors have a well-defined line of risk to focus around for where the stock could begin to accelerate the upward trajectory again.
Before looking at BSX stock, I would like to wish all readers a very happy and healthy 2015. While we never exactly know what the stock market holds in store, by looking at the signs/charts from multiple time frames, across asset classes and on single-stock levels — all while taking news flow into consideration — we can dramatically improve our risk management process.
After all, successful traders and investors are much more about risk management than reward chasing.
Back to business: Boston Scientific Corporation reported its latest financial results on Oct. 22, and its shares have rallied strongly. BSX reported in-line profits, but more importantly raised its full-year earnings outlook from a previous range of 79 to 83 cents per share to a new range of 81 to 83 cents — not a dramatic change, but obviously pleasing to investors.
BSX Stock Charts
Looking at BSX stock through the lens of the weekly chart, we see that after a multiyear bottoming phase that began in 2010, Boston Scientific began to materially lift off the lows in late 2012 through early 2014. For the remainder of 2014, however — after a 175% rally since late 2012 — BSX stock settled into a bigger picture consolidation phase that took place right below the reaction lows from the first half of 2008.
From this perspective, BSX — while still trading in this consolidation phase — is doing so constructively, and barring any break below the October lows, Boston Scientific looks well-positioned to eventually break past the black horizontal resistance line.
On the daily chart, if we zoom closer into the 2014 consolidation phase, we see that the October selloff in BSX stock served as a fake-out breakdown move below support, which by the second half of the month had already corrected itself with a sharp rally back into the 2014 trading range. After briefly revisiting the spring highs in late November, BSX stock again began to consolidate and did so holding above its 50-, 100- and 200-day simple moving averages (yellow, blue and red lines, respectively).
While anything is possible in the first few trading sessions of a new year, from here, BSX stock seems to favor continued upside and an eventual break to new highs.
Active investors could look to buy BSX on a break past the $13.80 area for a move toward $14.50-$14.75.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
