Friday, December 19, 2014

One Yes, & One No: Westport Innovations and MEDNAX (WPRT, MD)

Looking for some fresh trading ideas in a market environment that isn't offering many? Take a look at MEDNAX Inc. (NYSE:MD) and Westport Innovations Inc. (NASDAQ:WPRT). Though they're pointed in different directions, both MD and WPRT appear to be on the verge of trade-worthy moves. The fact that the two are nearly mirror images of one another is strictly coincidental.

After hitting a multi-year low in April, WPRT shares have clearly been on the rise. The stock's crossed above all of the key moving averages, save one - the key 200-day moving average line (green) at $18.28. Westport Innovations came close to hurdling this key long-term line in late June, but a brush with the key level sent the stock back-pedaling... for a few days. Shares bounced back today, crossing above the 200-day average for a while this morning before settling back to get comfortable right around the 200-day average's value.

Though not over the hump yet, Westport Innovations Inc. may not be a bad bet - if not now, then soon. WPRT shares crossed above a major long-term resistance line in early June, and has continued to advance. After months of suppression, there's a lot of pent-up buying waiting to unfurl here. And, it looks like it's going to happen.

Westport Innovations Inc. manufactures natural has engines.

As for MEDNAX Inc., it's hanging by a thread right on top of its 200-day moving average line (green). On slip-up, however, and the balance could be disrupted, MD could break under the 200-day average at $56.76, and a selling avalanche could begin. There's a modest chance of a floor being found around May's low of $56.25, but most likely, once the 200-day average breaks down as a floor, the sellers aren't apt to look back.

To fully appreciate just how vulnerable MDVN is here, one has to take a step back and look at a weekly chart. It's in this timeframe we can see that the recent stumble from MEDNAX has snapped a rising support line that's guided the stock higher for more than a year. This is a major paradigm shift, and should the 200-day moving average line not hold the stock up, there's not much else left below there to stop the bleeding.

MEDNAX Inc. is a provider of specialized health services.

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