After conducting a thorough examination of the stocks that could become acquisition targets following Zimmer Biomet's (ZBH) - Get Report recent $1 billion deal for LDR Holding (LDRH) , I found four medical device companies with healthy-looking charts and indicators. You don't need a referral to read further.
In this daily chart of Globus Medical (GMED) - Get Report , we can see a chart that many would avoid as too erratic but others may be attracted to it because the up and down swings could represent a trading opportunity.
Digging deeper, we notice that a few times when GMED dips to $22, the volume spikes up. What does this tell us? A rise in volume when a stock declines suggests that sellers are more active, but the stock does not continue lower as it holds $22. Heavy volume and the stock not breaking lower means that buyers have been equally aggressive. Now notice how the on-balance-volume, or OBV, line has been relatively stable the past 12 months. If there was more liquidation than accumulation going on, the OBV line should be declining. Prices have been above and below the 50-day and 200-day moving average lines several times, but right now the 200-day average is flat. In the lower panel, there are no bearish divergences to worry about at this time.
This weekly chart of GMED is pretty neutral-looking. You might say that a bullish-looking chart would be preferred, and that's OK. This chart is neutral, and it will only take a small advance to tip the chart to the upside. The 40-week moving average line is almost flat. The weekly OBV line is neutral, and the 12-week momentum study is close to zero.
K2M Group Holdings
In this daily chart of K2M Group Holdings (KTWO) , I want you to focus more on the price action this year rather than the past 12 months. Since January, KTWO has tried to bottom. We see an early May selloff, but prices have quickly recouped those losses. The OBV line drops sharply and also makes a comeback. There are no divergences to worry about. The moving averages tell an improving story with prices above the flat 50-day average and close to a crossover of the 200-day average.
In this weekly chart of KTWO, we don't have a lot of history, but I like what I see. Prices are testing the declining 40-week moving average line and it looks like it will only take a weekly close above $16 to make a breakout. The weekly OBV line shows a super-strong move up, suggesting very strong buying and accumulation. Momentum is neutral now.
In this daily chart of NuVasive (NUVA) - Get Report , we can see an attractive uptrend from the February low. Prices are above the rising 50-day and 200-day moving averages and there is a belated golden cross in May. The OBV line is rising nicely and telling us that buyers of NUVA have been more aggressive the past several months. Momentum is not giving us any caution warnings.
This weekly chart of NUVA shows a stock you want to be involved with from the long side. Prices are above the 40-week moving average line. Notice the action after the dip into the $40-to-$35 area, the OBV line turns up strongly, and the MACD oscillator gives an outright go-long signal.
In this daily chart of Orthofix International (OFIX) - Get Report , we see a rally going on the past 12 months. Prices are above the rising 200-day moving average line. Prices are below the 50-day moving average line, but it is still pointed up. The OBV line is pointed up from the February low and has softened a little recently, suggesting some profit-taking. The MACD oscillator signaled a liquidate-longs sell signal. Support can be seen at $42 and $40.
In this weekly chart of OFIX, we can see that we are above the rising 40-week moving average line. The weekly OBV line is OK. The MACD oscillator on this timeframe is above the zero line but recently signaled that longs should take profits. Despite some indicators that suggest caution, I would trade with the uptrend.