CareFusion’s spin-off from Cardinal Health has gotten a lot of attention and, it does sound like a good story judging from what the San Diego Business Journal  has to say about it.  What does it mean to us?  The fortune tellers are out in force predicting what is going to happen next and it makes excellent theater, but is it good for trading? 

I’d say that the best answer is “Maybe.  Maybe not.  We’ll see.” 

In theory, if you knew enough about a situation and could wait long enough, you could indeed predict what was going to happen and have it work out for you.  For me at least, things work out better when I start from the assumptioin that I don’t know enough and I don’t have the resources to wait long enough.

That’s why a solid trading plan that limits losses, adds on to winning positions, and has criteria for when profits will be taken is vital.  For the umpteenth time:  the “story” provides a reason,  but the sanest entry also requires that the price makes a significant move in the direction that validates the story.

So, while all the conjecture and analysis of available data is entertaining ( and perhaps will even prove to have been exactly right ),  my money is going to be waiting to see the price and volume patterns that my trading plan calls for before I enter.