Zimmer Holdings, Inc., through its subsidiaries, engages in the design, development, manufacture, and marketing of orthopedic reconstructive devices, spinal and trauma devices, biologics, dental implants, and related surgical products in the Americas, Europe, and the Asia Pacific. The company offers orthopedic reconstructive devices that restore function lost due to disease or trauma in joints such as knees, hips, shoulders, and elbows; dental reconstructive implants, which restore function and aesthetics in patients who have lost teeth due to trauma or disease; spinal devices that are utilized by orthopedic surgeons and neurosurgeons in the treatment of degenerative diseases, deformities, and trauma in various regions of the spine; and trauma devices used primarily to reattach or stabilize damaged bone and tissue to support the body’s natural healing process. It also provides surgical products comprising surgical supplies and instruments designed to aid in orthopedic surgical procedures and post-operation rehabilitation. Its customers include orthopedic surgeons, neurosurgeons, oral surgeons, dentists, hospitals, stocking distributors, and healthcare dealers, as well as agents, healthcare purchasing organizations, or buying groups.
To review potential trading opportunities with Zimmer’s stock, please take a look at the 1-year chart of ZMH (Zimmer Holdings, Inc.) below with my added notations:
After trending higher since last summer, ZMH has formed what appears to be a Triple Top price pattern (navy). Triple Tops are reversal patterns that are as simple as they sound: Rallying up to approximately the same point on (3) different occasions (T) while finding the same support twice in between the tops. As with any price pattern, a confirmation of the pattern is needed. ZMH would confirm this pattern by breaking the $72 support (red) that was created by the Triple Top pattern.
Keep in mind that simple is usually better. Had I never pointed out the Triple Top pattern, one would still think this stock was moving lower simply if it broke below the $72 support level. So, whether you noticed the pattern or not, the trade would still be the same.
The Tale of the Tape: ZMH may have formed a Triple Top price pattern with a $72 support level. A short trade should be placed if the stock were to break $72 with a stop set above $72.
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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!
Christian Tharp, CMT