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CUP WITH HANDLE


Is It Time To Buy Orthofix International?

03/23/11 08:23:58 AM
by Koos van der Merwe

Here's a share that has given a buy signal as the market recovers.

Security:   OFIX
Position:   Buy

Orthofix International is a diversified orthopedic products company offering a line of surgical and nonsurgical products for the spine, orthopedics, sports medicine, and vascular market sectors.

FIGURE 1: ORTHOFIX, MONTHLY
Graphic provided by: AdvancedGET.
 
Figure 1 is a monthly chart and shows how the price fell from a high of $61.66 in December 2007 to a low of $8.98 by October 2008. From that low, it started rising to reach a high of 35.32 by April 2010 as the NASDAQ recovered. At the moment, the chart shows that it is trading between the Fibonacci ratios of 38.2% and 50%. A move above $35.32, the 50% retracement level, suggests that it will test the $41.54 level, the 61.8% Fibonacci ratio. Note that the relative strength index (RSI) is showing strength. Volume, however, is below average.

FIGURE 2: ORTHOFIX, DAILY
Graphic provided by: AdvancedGET.
 
Figure 2, a daily chart, shows that a cup-and-handle formation developed, suggesting a target of $37.61 (31.83 -26.05 = 5.78 + 31.83 = 37.61). The handle, as shown on the chart, has given a buy signal, soon to be confirmed by the moving average convergence/divergence (MACD) indicator as shown.

FIGURE 3: ORTHOFIX, OMNITRADER, DAILY
Graphic provided by: OmniTrader.
 
Figure 3 shows that the vote line has given a buy signal. The indicators shown on the chart are as follows:

1. A three inside candlestick pattern suggesting a buy
2. The MACD volume indicator below the zero line and moving into a buy
3. Ergodic oscillator giving a v signal
4. RSI stochastic cycle oscillator giving a buy signal.

With the market starting to recover from a strong correction, Orthofix suggests a buy.




Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address: petroosp@gmail.com

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