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Looking at the 5-year chart, the pattern is very clear. Shorter-term charts on this stock aren't very useful. A line drawn along the bottoms is right where we are today. The dip below that line (at 20) in late 1999 was worrisome, but support seems to be clearly reestablished. For the last 4+ years, whenever the stock gets to 20, for whatever reason, buyers step in in sufficient numbers to end the selloff. The downside potential, from here, is minimal.

The upside potential? A line drawn along the tops of the last 4 years (using a log graph) also shows a clear pattern. It defines the top of a rising wedge, which will be at about 50 this year. That's 150% above 20.

I've followed this stock through two upcycles and downcycles. I'm amazed at how volatile it is. I'm also amazed how much sentiment swings re. the company's future prospects. I've come to the conclusion that it is impossible to predict ahead of time which products are going to be successful in the market, or how the endless turf battles in court are going to turn out. The safest, and most profitable method of investing in drug and medical equipment companies, I've decided, is to invest in a company with a decent long-term track record, when sentiment is at a nadir. When the last momentum player has given up in despair, when no one has anything good to say about the company, (except, "it's a good value", which is the kiss of death in today's market), that's the time to buy. I think that's where we are with BSX today.

I'm buying BSX LEAPs (2002 25s), whenever the stock dips below 20. The 2003 LEAPs will become available in May, I think. If the stock is still around 20 then, I'll start buying those, in increments. The expiration date is far enough in the future to make them proxies for the stock, with much more upside potential. And, if the stock goes nowhere for the next 18 months (unlikely), I can sell them, and still get most of the time premium back.
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