Boston, MA 09/24/2014 (wallstreetpr) – Medtronic, Inc. (NYSE: MDT) (Closed: 64.08, Down: 2.88%) saw an open with a huge gap down and despite a recovery attempt, closed significantly lower. The new tax rules released by the US Treasury on Monday may have affected MDT the most among the eight companies with pending tax inversion deals. Now Medtronic, Inc. (NYSE: MDT) may be forced to reconsider its decision to change its tax address to Ireland and this uncertainty will certainly affect the stock price a lot. The stock is finding a lot of sellers at the current levels as evident from the spike in volume at 18.5 million against the average of 7.6 million.
For the day, the stock has support in the area of $63.15-05, the confluence zone of the last swing low and the Golden Ratio retracement level of the rally from the August low of $60.68 to the September high of $67.11. The next support comes at $62.50, from the trendline connecting the April low of $55.85 and the June low of $58.32. Actually the entire rally from $53.33, the lowest point of 2014, has been contained in a near perfect channel and the trendline mentioned above is the lower boundary. So a break below $62.50, if materializes at all, can be the first sign of real weakness.
Now a stock in a bull market, trading only 4.5% away from the life high, enjoys the benefit of a lot of supports and investors being primarily interested for buying in dips. The long term chart shows the band between the 2000 top of $62 and the 2006 top of $59.87 to be an excellent support area now. Considering the failure of all the negative divergences and even overbought states of the indicators in the face of this relentless long term bull market, the worst situation for the stock may be limited to a drop to $59 at most.
So the investors may wait for a further dip and accumulate the stock in the broad band of $59.00-$62.50.
