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Long-Short Idea List: 02-14-19

Written by Lance Roberts | Feb 14, 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.

This week we used our NEW SCAN TOOL (Click on SCAN in the menu bar above) to screen for our candidates. We recently added several new screening parameters to include both fundamental factors (Piotroski Score) and momentum factors (Mohanram Score) along with Zack’s rankings.

I have included a clip of the screen at the beginning of each section below.

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

BA – Boeing Co.

  • BA has rallied sharply since the December lows. However, the fundamentals of the company remain very strong. The recent breakout to new highs makes BA very attractive currently.
  • BA has also recently triggered a buy signal but is extremely overbought short-term. Look for a pullback to the $380-400 for an entry.
  • Stop-loss is at $350

BLFS – BioLife Solutions

  • BLFS broke above the longer-term resistance and is close to triggering a buy signal.
  • There is currently upside to $24-25 with a very tight stop directly below so risk/reward for a trade is good.
  • Stop-loss is currently $15.50

MRCY – Mercury Systems, Inc.

  • MRCY recently broke out to all-time highs after triggering a buy signal. 
  • Currently, MRCY is extremely overbought so some correction is needed to warrant an entry.
  • Short-Term Positioning: Bullish
    • Buy on pullback to support @ $55-57.50
    • Stop-loss is currently $50 after “buy”

RNG – RingCentral, Inc.

  • RNG has also just recently broken out to a new high and has triggered a buy signal.
  • Currently RNG is extreme\ly overbought so wait for a pullback.
  • Short-Term Positioning: Bullish
    • Buy on pullback to support at $95-100
    • Stop-loss is tight at $95 after “buy”

VCEL – Vericel Corp.

  • VCEL is currently attempting a breakout to all-time highs. 
  • It is also, close to triggering a “buy” signal within a strong uptrend.
  • Short-Term Positioning: Bullish
    • Buy at current levels.
    • Stop-loss is currently $17

SHORT CANDIDATES

APC – Anadarko Petroleum

  • APC has failed to gain any traction at all during a strong rally. 
  • Currently on a deep sell signal, and oversold, look for a failed rally to short APC.
  • Recommendation is to short on a rally to $47.50 that fails.
    • Sell 1/2 position at $47.50
    • Sell 1/2 position on break below $41
    • Stop-loss is at $50

ARMK – Aramark 

  • ARMK had a sharp rally but failed at resistance. 
  • Sell-signal still in place and position is currently oversold.
  • Short-Term Positioning: Bearish
    • Short at current levels or on any rally to $32.50
    • Stop-loss is currently $33.50

DWDP – Dow Dupont

  • DWDP has failed to rally with much of the basic materials sector and earnings were less than optimal.
  • DWDP is currently working on a triple bottom that looks to be broken.
  • Look to sell short DWDP on a break of $50-52 which would suggest a decline into the $40’s.
  • Stop-loss is currently $58

MCD – McDonalds, Inc.

  • MCD just triggered a “sell signal” and is threatening to break support at $172.50
  • Short-Term Positioning: Bearish
    • Short on break below $172.50
    • Stop-loss is currently $175

M – Macy’s 

  • M has failed to rally, at all, with the recent recovery in the market. This makes the stock more vulnerable to a decline if the market sells off. 
  • M is very oversold and is also on a deep sell signal, so downside is somewhat limited currently. 
  • Short-term positioning: Bearish
    • Short at current levels
    • Target to cover is $18-19
    • Stop-loss is currently $28.

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

2019/02/14
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