EarningsBeats Digest

Published: Mon, 10/18/21

EarningsBeats.com Digest for October 18, 2021

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Medical Supplies Falling, But This Relative Leader Trying to Buck the Trend

Edwards Lifesciences Corp (EW) is 10 days away from reporting its latest quarterly results. It's been a leader in the medical supplies industry and, in fact, moved to another relative high on Friday. But there's a problem, Houston. Medical supplies ($DJUSMS) has been getting torched and the group just set a new 52-week relative low vs. the S&P 500 on Friday. It's always a challenge for a stock when its industry group is under attack and that's exactly where EW finds itself right now. The chart has bullish and bearish signals galore. Check this out:

First, let's consider the positives. The PPO has begun turning back up, so at least the downward momentum is slowing. Next, EW has moved to a 52-week relative high vs. its medical supplies peers as it's been trending higher the past couple weeks, while the group's downward spiral has been unrelenting. The bad news is that volume trends are awful, the AD line is well off its high, and EW is now testing its 20-day EMA resistance. Throw in the horrible absolute and relative price performance of its peer group and it's easy to see why the chart is confusing. Because we're in a secular bull market, I'll give the benefit of the doubt to the bulls here, but EW is a leader. So if it fails to produce solid quarterly results in 10 days, I'd really be skeptical of others in the group.

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Tom Bowley
Chief Market Strategist

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