Starting to Rebuild Genoptix

by: Trader Mark December 03, 2008 | about stocks: GXDX    
Trader Mark

Trader Mark

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Genoptix (GXDX) broke its 200 day moving average just over a week ago after being one of the last holdouts (holding above) .. .that was at $31. In this market, when you break support, you die a quick death - it's now down to $26. This stock was over $41 three weeks ago after a good earnings report [Nov 7: Genoptix -Market Likes What it Hears] showing once again, no trend lasts, and even if you buy "winners" you get your head handed to you 90% of the time in this market. Despite a report the market liked, the stock is now down 37% in three weeks. And that's one of the "strong stocks".

Looking at a long-term chart, the stock bottomed in early July around $25, so I am hoping this creates a "double bottom" situation again. A close below $25 would be bearish as this condition would be broken, so we'd sell assuming there is more downside from there. But for now, we'll increase exposure from 0.2% of fund to 1.4%, with purchases just over $26.00.

Unfortunately, support turns into resistance, so until proven otherwise, the upside will be limited to the 200 day moving average which it just broke through not long ago (just under $31), but that's a juicy 19% from here. Frankly, $28 looked to be excellent support as well, but as I wrote earlier today, I have not been paying much attention to individual names of late, so that enticing entry point was missed (thankfully in this case).

As you can see, every purchase is technically driven and nothing to do with fundamentals;if you bought on a good earnings report you were body slammed. We stay in high levels of cash and try to make opportunistic trades here or there on stocks completely beheaded. Other than that it's just casino ETF trading between 3 and 4 PM.

[Sep 3: Starting Genoptix Position]

Disclosure: Long Genoptix in fund; no personal position

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