– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Gentiva Health	GTIV	Holding	11/15/2011	+2%

On Wednesday, we wrote this about GTIV = Here are some observations about GTIV that has us very interested in these shares –

• On November 7-8, the CEO, CFO, 3 vice presidents, and 2 directors purchased a total of approx. 292,000 shares at prices ranging from $3.75 – $4.60  (worth approx. $1.2 million).  (Insider buying after a disastrous 6 months for the company shares)
• The company still makes money.  It is not a loss-making operation.
• The company provides home health services and hospice care as well as skilled nursing and therapy services.
• The company’s presented earnings on November 3rd that showed that for fiscal year 2011, the company will earn between $1.50-1.70/share, on revenues of $1.78-$1.82 billion.  At $6/share, the stock is selling at a price / earnings ratio of approx. 4.0.    There is room for the stock to double or triple on a low p/e of 4.  The company was able to increase revenues +18% year over year.  The stock could also simply sink back down and bump along the bottom until investors get the courage to invest in the market again.  Sentiment can change quickly, as we saw and profited from in October.
• The shares have declined from  approx. $27/share in April down to $3.13 on October 5th.  That’s an -88% drop in the value of the shares.  At our purchase price of $5.85, the shares are down -78% from that value in April.
• The decline in shares was precipitated by 2 things – 1. A large acquisition that the company made that brought about significant debt. 2. Uncertainty concerning the final outcome of the U.S. governments reductions in re-imbursement rates for the type of patient care that GTIV provides.
• The government reductions in re-imbursement rates was apparently much LESS than feared.  The acquisition appears to be much better understood at the moment.
• When you look at the vertical volume bars at the bottom of the chart, you will see many large, green columns.  These signify accumulation of the shares at these low prices.
• The push higher in the share price on November 9th, taking the shares back above $5/share was the first STEP in what may be a new Uptrend in the shares.
• Notice on the 3 consecutive trading days after November 5th, that the shares simply consolidated the large move from November 9th and didn’t give up much, if any ground in price.
• Then came a downgrade to the company two days ago on November 14th.  The stock sank a bit in the morning, but recovered in the afternoon.  When a company’s shares do NOT give up ground on a downgrade, that is a good sign – particularly on such a beaten down stock.  It say’s “for the moment, there are few sellers”.  Consider this a test that the stock passed with flying colors.  So far so good.
• Yesterday’s second step higher on high volume represents the confirmation day of the November 9th move higher.  A confirmation day, within 7 to 4 days of the first UP move is an excellent sign of investor interest and validates (for the moment) the current UPtrend that is in its early stages.
• Notice how nice and tight the price pattern is developing in this stair stepping pattern.  This is the kind of price behavior that we really like as stock investors.
• We have a very easy to define location to place our protective stop down at around $4.30/share.  If the shares violate the low of the November 9th move higher, we don’t want to be on board the shares.
• It appears that the shares have been oversold due to the overall weakness in the markets, amplified by points 1 and 2 listed above.

Here is our SMC “Close-Up” chart for the S&P 500 ETF (SPY).  (Click on it to enlarge it in a separate browser window).  Please review this chart to SEE the “flag” pattern that developed over the last 3 weeks and yesterday’s DOWNSIDE resolution to this pattern that again throws open the door for further downside for the market.

One characteristic that is lacking with this market at the moment is FEAR.  After yesterday’s resolute downside move, it would not have been out of the ordinary for the market to really gallop further down today as stops were taken out yesterday.  That didn’t happen (so far).  On the other hand, it would also not have been out of the ordinary for the market to exhibit strong weakness as it did yesterday and then today – on some positive twist in the news – shoot higher.  That didn’t happen either (which is a break in the recent behavior pattern of the market). The market simply didn’t move much today overall.  What that is saying to us is this – Ho hum.  Investors are not rushing to sell or buy shares – momentarily.

Consider –

This week the shares of Research in Motion were upgraded twice, separately.  The shares are at both 52 week and multi-year lows.  Under such conditions in the past, the stock would have had buyers shooting it higher and running-over shorts who have over-stayed their welcome.  That didn’t happen, yet.

Groupon (GRPN $26.19) moved higher into the close today, moving nicely higher off a recent $23.50 consolidation.

Gentiva Health (GTIV $5.99) moved UP from $5.60 to press recent highs this late afternoon.  It could have simply sat down at those lows for the day, but investors pushed it up a bit.

– Benchmarks “At a Glance” –

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