In August I was forced to cover a fundamental-based short in ignominy. I knew the company was over valued because in a previous life I had made components for products much like this company’s Oxygen Concentrators for therapeutic oxygen delivery systems. I knew that sooner or later Medicare related pricing pressures and stiff competition for what is a essentially a commoditized product would eat away at the mega growth story that the Wall Street suits thought they had going.
So I covered the short, took a fairly hefty loss and then watched the stock climb another 70 bucks a share before taking my eye off it. And then… whammo!
I now re-introduce you to former Wall Street medical “device” (ha ha ha) darling Inogen (INGN) as it seeks out a proper valuation (in my opinion it’s still a long way from proper valuation at a forward PE of 69 and a trailing PS of 9.5).
I lost money shorting it because I went with the fundamentals (which demanded that INGN was an absolute value pig) instead of the technicals (which were completely up trending). So would INGN work in reverse now as all the suits’ clients with hefty tax losses finish up their selling? Back then it was short it on funda, be wary on technical. Could it now be to take it long for a seasonal technical trade, be wary on the funda still?
I don’t think I am going to touch it but this post is my way of airing a grievance, flogging myself in public and also asking some valid questions just for the hell of it. Were I just a chart guy, I’d have bought this one as a bottom feed, as I did with a few other stocks with which I have no such negative associations.
So what do we have technically? Well, gap #1 is filled (gap #2 is the ultimate downside target where there is more support and a reader who had a previous business association estimated fair value may be). That was at around 100 bucks a share. I think it’s still rich, but well…
Anyway, a gap is filled at a support area and now INGN is bouncing. The valuation has been cut in half and there is an upside gap that could fill, after all. Interesting. I can hear the chart guy in me trying to reason with the part of me that is not a nerd who stares at charts.
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