Edwards Lifesciences (EW) has more than tripled in the past three years and, with hindsight, would have been a great addition to pretty much anyone's portfolio. Does the future look as promising on the charts?
In this daily chart of EW, above, we can see prices turned up in August from a low and headed higher with a dramatic gap to the upside in April. EW has partially filled the gap, zig-zagging lower to late June. The On-Balance-Volume (OBV) line made a shallow dip from May into June. The OBV line is back up to its May highs, suggesting that buying has been pretty aggressive since September, even during price setbacks.
Prices are currently above the rising 50-day moving average line and the 200-day average. The 12-day momentum study in the lower panel is likely to see a bearish divergence if prices make a new high. The momentum readings were very strong in April, and probably won't be exceeded even if prices make new highs this month.
In this three-year weekly chart of EW, above, we see that prices are firmly above the rising 40-week moving average line. The weekly OBV line is neutral, not pointing down and not pointed up with the price action. The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside above the zero line. Some traders see that crossover as a sell signal, but I and others take it as a liquidate longs sell signal, not an outright sell.
Strategy -- continued strength in the overall market and the medical device industry could lift EW above $111 for a breakout, but general market weakness in the third quarter could result in weakness below $99 and additional sell signals. It would be nice if we had a clear vision of the future here but technical analysis is a windsock and not a crystal ball.
