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Long-Short Idea List: 01-31-19

Written by Lance Roberts | Jan 31, 2019

Each week we produce a chart book of 5 to 10 stocks which have hit our watch list for potential additions to our long-short equity trading portfolio.

We have broken down the list into two sections – Long and Short and have provided targets for potential actions.

Importantly, these equities are not part of our long-term investment themes and are far trading purposes only. We may, or may not, implement any of the ideas on this list. They are simply for consideration.

Also, it is entirely possible that our long-term themed equity model could be long a position which could show up on the “short-idea” list temporarily. Trading and investing, while having many commonalities, are different based on time frames and objectives and are not always handled exactly the same.

HOW TO READ THE CHARTS

There are four primary components to each chart:

  • The price chart is contained within the shaded area which represents 2-standard deviations above and below the short-term moving average.  
  • The Over Bought/Over Sold indicator is in orange at the top.
  • The Support/Resistance line (green) is the longer-term moving average which also acts as a trailing stop in many cases.
  • The Buy / Sell is triggered when the green line is above the red line (Buy) or vice-versa (Sell).

LONG CANDIDATES

MCD – McDonalds

  • Stock has held the long-term moving average as support and is currently pushing toward new highs.
  • Short-term positioning: Bullish
    • Previous recommendation to buy on pullback to $182.50 has been reached.
    • Stop-loss is $175
    • Short-Term Positioning: Bullish

APD – Air Products & Chemicals

  • Broke out of recent consolidation pattern.
  • Close to triggering a weekly buy signal
  • Short-Term Positioning: Bullish
    • Buy at current levels
    • Trade target is $170, look to add to position on breakout.
    • Stop-loss is currently $158.50

DEO – Diego, PLC

  • DEO looking to break above resistance
  • Clost to triggering a weekly “buy” signal.
  • Short-Term Positioning: Bullish
    • Buy on breakout above resistance @ $145
    • Stop-loss is currently $137.50

DG – Dollar General

  • DG close to breakout to new highs which would be a “buy” point.
  • Also, close to registering a weekly “buy signal.”
  • Short-Term Positioning: Bullish
    • Buy on “breakout” above $116
    • Stop-loss is tight at $112.50

EEM – Emerging Markets

  • In the equity portfolio it is more challenging to do fundamental analysis on individual emerging market equities. Therefore, we use EEM as a proxy.
  • EEM finally broke out of a long-consolidation process.
  • It has also triggered a weekly “buy” signal after a long period of decline.
  • Short-Term Positioning: Bullish
    • Buy at current levels.
    • Stop-loss is currently $41

SHORT CANDIDATES

HOG – Harley Davidson

  • Downtrend remains intact currently. 
  • Poor earnings results were bought with hopes of a turn-around story. However, longer-term trend suggests potential disappointment.
  • Recently rally failed at down-trending short-term average.
    • Last weeks recommendation to short @ current levels – remains.
    • Stop-loss is currently $40
    • Short-Term Positioning: Bearish

BMY – Bristol-Meyers Squibb Co.

  • Failed at overhead resistance within the context of a downtrend.
  • Short-Term Positioning: Bearish.
    • Short at current levels.
    • Stop-loss is currently $51

HRL – Hormel Foods

  • HRL is threatening to break important support.
  • A weekly “sell” signal has been registered.
  • Short-Term Positioning: Neutral
    • Short on a break of current support at $41
    • Stop-loss is currently $44

NWL – Newell Rubbermaid

  • Recent rally failed at downtrend resistance in series of failures.
  • Short-Term Positioning: Bearish
    • Short at current levels.
    • Stop-loss is currently $24

ORAN – Orange

  • Recommended a short-position two weeks ago.
  • Stock sold-off to bottom of downtrend
  • Cover 1/2 of short-position now.
  • Look to add 1/2 position back on a failed rally to $16
  • Short-Term Positioning: Bearish
    • Cover 1/2 short now. Add 1/2 position back at $16
    • Stop-loss is currently $16.75

Talk with an Advisor & Planner Today!

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Lance Roberts is a Chief Portfolio Strategist/Economist for RIA Advisors. He is also the host of “The Lance Roberts Podcast” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter, Linked-In and YouTube

2019/01/31
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