We have looked at DexCom (DXCM) a bunch of times in the past. It got crushed in the broader market downtrend and has recently been looking for some support and may have found it. After dropping more than half from it’s high last fall, it is leveling off. If it can confirm a bottom, it could be a good buy. Here is what we are looking for:

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DXCM Has been testing its 10 day moving average recently. If it can break above it for a couple trading days, it could confirm the support we are looking for to allow it to refill. I would say with all stocks it is less likely they we refill to where they were before the beginning of the year since the broader market drop has moved those targets lower.

Grabbing a small position after it moves above 300 is one way to consider trading DXCM. It has the potential to make a solid run up 50 or more. Another thing to consider is taking a longer call option and giving it more time to recover.

The Sept 16 370 calls are just under $10 at this point and the longer time til expiration give more room for an upward run to play out. Andy Chambers does a great job of spelling out the benefits of longer term options in his Market Propulsion book. We used his approach to look at MAR a week or so ago (check it out here)and it provided a potential doubler. To get more info on how he does it, click here.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily