Todays Big Stock: Kinetic Concepts, Inc. Common S (NYSE: KCI)

With the stock market having lost close to 20% in a couple of weeks the perception would be that everything is trending lower. Although I have yet to find any stocks that haven’t had a terrible week or two as of late, I do think there are a few stocks still maintaining an overall trend higher. Stocks that have maintained their trend higher through the current market sell-off will most likely be the ones that rally strongest when the market finally does rally. One such stock that may fit that description would be Kinetic Concepts Inc. (KCI).

Kinetic Concepts, Inc. is a global medical technology company, which is engaged in the discovery, development, manufacture and marketing of therapies and products. Kinetic’s primary business units serve the advanced wound care, regenerative medicine and therapeutic support systems markets. Kinetic operates in three segments: Active Healing Solutions (AHS), LifeCell and Therapeutic Support Systems (TSS).

To review Kinetic Concept’s stock, please take a look at the 1-year chart of KCI (Kinetic Concept, Inc.) below with my added notations:

Although KCI has sold off like all other stocks over the past few weeks, the stock has continued its overall trend higher regardless. After having a rough day yesterday, KCI still managed to hold its level of $60 (green). Obviously, if the market continues to sell-off, KCI may break its $60 level thus paving the way for lower prices for the stock. In the situation where that occurs, $55 would be the next potential level of support (purple) for KCI.

The Tale of the Tape: As hard as it is to believe, KCI is currently still in a trend higher. KCI also has an important level at $60. A long position could be entered at $60 with a stop below $60. If KCI were to break below $60, a trader might want to enter a short position with a stop loss set above $60 expecting a drop down to the next level of $55. Another long trade could be made at the $55 level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT