Gilead Sciences is a deep value play, along the likes of a Joel Greenblatt "Magic Formula" stock. Around September I expressed a bullish interest in GILD given its fundamentals and its valuation. During that time, GILD traded at $73. Since I expressed a long interest, the stock has done nothing but decline. Looking back on my initial bullish opinion, I didn't take into consideration the charts, let alone even think about TA.
The fundamental research was over, and due to the fundamentals I didn't really think to take a look at the charts. After all, it was my inner Buffett saying, "Hey, this is a great business, don't even worry about the price, since the company is so great, it doesn't matter. Heck, if it goes lower, buy more!" Well, after reflecting on this consensus I realized how foolish it was of me.
If I would've taken the time to look at the charts, I would have realized that at $73, it didn't have much support on that level, with the most recent support level being at $66.51. So, instead of waiting for that support price to hit, I thought it would be a good idea to buy at $73. Not only did that bullish decision reflect in a loss of capital, but it resulted in dead money, money that could've been used in other capital allocations.
Nevertheless, I like GILDs fundamentals so much I had to take a second look as the share price kept falling. Now, at $66.51, GILD is right at the support level from mid 2014. GILD is still in a bearish channel, but since the company is so solid on its balance sheet and has loads of cash, if the bearish channel is broken upward, I will look to get in around the $71 level.
Will keep watching.
All the best,
RC
The fundamental research was over, and due to the fundamentals I didn't really think to take a look at the charts. After all, it was my inner Buffett saying, "Hey, this is a great business, don't even worry about the price, since the company is so great, it doesn't matter. Heck, if it goes lower, buy more!" Well, after reflecting on this consensus I realized how foolish it was of me.
If I would've taken the time to look at the charts, I would have realized that at $73, it didn't have much support on that level, with the most recent support level being at $66.51. So, instead of waiting for that support price to hit, I thought it would be a good idea to buy at $73. Not only did that bullish decision reflect in a loss of capital, but it resulted in dead money, money that could've been used in other capital allocations.
Nevertheless, I like GILDs fundamentals so much I had to take a second look as the share price kept falling. Now, at $66.51, GILD is right at the support level from mid 2014. GILD is still in a bearish channel, but since the company is so solid on its balance sheet and has loads of cash, if the bearish channel is broken upward, I will look to get in around the $71 level.
Will keep watching.
All the best,
RC