GMED Breaks All Time High And Looks Ready To Make More

GMED chart

GMED is on my short list for a few reasons. Have a look at point 1 on the chart above.

GMED corrected 42% back in March. I prefer to buy stocks that have corrected between 10% and 35%, while GMED has corrected 20% than I would like it, it happened during a major bear market sell off. The S&P500 corrected 35% during that same period so 42% is not a ridiculous decline.

Now let's look at point 2 on the chart. We have some serious institutional buying going on here. The first tall green bar drives the price up until overhead supply pushes it back down. It gets very close to its' previous low before the insitutions come back to drive the price up again. We missed a shakeout here by just .37 cents. Shares were under serious accumulation, propping the price up.

The next two earning reports beat estimates and the institutional buyers come back both times pushing the price higher. At the same time the overhead supply kept pushing the price back down, narrowing the price action a couple more times, but keeping the price trending up.

The tall green volume bars correspond with strong price moves up the chart, vastly outnumbering tall red bars.

The price action continues to narrow until we get to point 3. Now the price action has narrowed to a 3% range from the high to the low. At the same time volume has pulled back well below the 50 day average.

And the best part?

The price is very close to the all time high set just a few days ago.

I'll be watching closely to see if it breaks out of its' current base on high volume. I already own a quarter position which I've been holding since before I learned about VCP. It looked to me like GMED was going to set up nicely so I didn't sell.

My plan is not to add at a base breakout, but to add after the first pullback after it breaks out. I'm looking for some healthy price action and then I'll add another half position.

Updated Dec 12, 2020 by Scott
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Updated Dec 12, 2020 by Scott