Company Description
Theragenics Corporation is a medical device company serving the surgical products and cancer treatment markets. The Company operates in two segments: the surgical products segment and the brachytherapy seed segment. Its surgical products business manufactures, markets and sells disposable devices primarily utilized in certain surgical procedures. Its brachytherapy seed business manufactures, markets and sells radioactive seeds primarily utilized in the treatment of early stage prostate cancer. The Company designs, manufactures, assembles, packages and distributes its surgical products in three primary production facilities, each of which manufactures different products. The product lines in its surgical products business include Sutures, Needles and Brachytherapy Accessories, Guidewires, Micro-Introducer Kits, Orthopedic Needles, Pain Management Needles and Access Needles. Effective February 17, 2012, the Company purchased Core Oncology's prostate brachytherapy customer base.
Faizan's take
TGX last closed at $2.01 a share. The stock is flashing some very interesting technical signals. All these signals are marked on the chart above. Before I go into the details of these signals let me just briefly mention that technical analysis is handicapped in the sense that it can just provide us with stocks that have a high probability of moving up and cannot categorically guarantee us an upward move. Keeping that in mind this stock is a classical example of "Stan Weinstein's triple confirmation pattern" which is known to uncover exceptional winners.
Triple Confirmation Pattern
So this is how the triple confirmation pattern works: In addition to the basic requirements of the price being above both the 50 day and 200 day moving averages, three signals have to flash on a chart in close proximity to each other. These three signals are as follows:
1. For the past several months the RSI of the stock should be "hugging" the center line and then on the day the breakout occurs the RSI should move sharply and decisively into positive territory. This can be observed clearly on the chart above where after the initial breakout in late May the RSI sharply moved above the center line and has remained there since.
2. The volume surge on the day of breakout should be immense and by immense I mean more than ten times the average daily volume of past several months. This can also be clearly observed for TGX. The volume surge on the day of breakout was more than 10 times the average volume of past several months.
3. While in the in the base region before breakout the stock should be making huge swing i.e. the stock should be gaining and dropping 25% to 50% of its value in the base region swings. In this case it can be seen that the minimum TGX reached in the base region was roughly $1.35 in February this year and the max it has hit is around $1.90. Which means that stock has been moving more than 30% of its value in the base region. With that all three requirements of the triple confirmation pattern have been confirmed.
In addition to this pattern being confirmed it can also be observed from the Chaikin money flow indicator that for the past several months a lot of money has been flowing into the stock which is always a good sign.
So there you have it! TGX is apparently poised for a huge move up. Now is a good time to add positions to this stock. It is likely that the stock will retrace its recent upward move to its last support i.e. $1.95. So if that happens you can use that pullback as an opportunity to add more positions. In case the stock never pulls back you can still ride the upward run on your initial position.
Also, it is important to remember that the "triple confirmation pattern" is not for short term investors. Don't buy this stock if you are not willing to hold it for at least a couple of months.
When to sell?
I try my best to avoid giving recommendations on sell points. However, I will point out that there is a small resistance at $2.30. The stock might stumble at this resistance a bit or it might just shoot past it. Use your own intuition and research to find a good sell point.
When to cut your losses?
There is an old saying in technical analysis "Cut you losers, and let your winners run". As I said before there is always a chance that the stock might not move the way you expect it to move. If that happens I would recommend selling all your positions when the stock goes below $1.85 a share. Never ever stick with your losers. Nobody makes money on every single stock they buy, you have to have a system that can make money in the long run.
Conclusion
With all that being said I believe that it is highly likely that TGX will go for a good bull run. Hope you guys enjoyed reading. Please feel free to leave comments or questions below this post.
