Monday, June 15, 2009

Bookkeeping: Closing Thoratec (THOR)

As I perused charts this weekend looking for new ideas, I saw a limited amount of stocks below their 20, 50, and 200 day moving averages. For well traded stocks (200K daily volume) over $10, with a market cap over $300M... there were less than 200 - unfortunately a few are sitting on our sheets. Thoratec (THOR) is one of them, and we see some quite extreme weakness after a very rosy earnings report. So I am going to let the charts decide this one and close the last smallish piece of the long position - we only had a 0.4% stake remaining.

While I questioned the valuation post earnings [May 8, 2009: Thoratec Executes Well in Healthcare Space]

I am still struggling mightily with this type of valuation (40x-ish forward estimates even with this beat), but again - this stock market seems not to care about valuation anymore so it's a tough call on what to do.

....the chart showed no reason to be wary. But in the past month the chart has gone from very good.....

.... to very troubling.

In fact with the 50 and 200 day moving averages as resistance lines, this would of been an excellent short candidate on Friday with 2 layers of insurance to backstop you.

[Feb 19, 2009: Thoratec Acquires Heartware]
[Feb 6, 2009: Thoratec Beats; Market Yawns]
[Dec 5, 2008: Thoratec with Positive Data]
[Oct 30, 2008: Thoratec Smashes Earnings; Somehow Guides Up]
[Aug 4, 2008: One for the Radar - Thoratec]

No position

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