IMPORTANT NOTE: Each week we produce a chart book of 10 stocks which have hit our watch list for potential additions to our long-short equity trading portfolio. With the recent sharp advance in the market, we it has become a difficult task to find potential candidates this week. This is indicative of an overextended bull run that is due for a correction.
As noted last week, the new SCAN TOOL also has several new screening parameters to include both fundamental factors (Piotroski Score) and momentum factors (Mohanram Score) along with Zack’s rankings.
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).
CRM – Salesforce
- Last week we recommended CRM as a potential long.
- With the 50-dma crossing above the 200-dma, a breakout to new highs, and a triggered “buy” signal, the bullish trend for CRM remains.
- We said that with CRM being very overbought to look for a pullback to support to add exposure.
- We recommended buying 1/2 position and add on a on pullback to $150-155.
- That target was reached this week.
- Stop remains at $145
GOOG – Alphabet Inc.
- GOOG broke above moving average resistance and triggered a recent buy signal.
- Currently, GOOG pushing 2-standard deviations above its intermediate term trend.
- Buy 1/2 position now and 1/2 position on a pullback to $1100-1125.
- Stop-loss is currently $1075
HD – Home Depot
- HD recovered from last years sell-off and has registered a buy signal and is not completely overbought currently.
- Buy 1/2 position at current levels and add 1/2 above $195
- Stop-loss is $180
JPM – J P Morgan
- JPM is very close to triggering a buy signal and is not currently overbought.
- Price action has become very tight currently and JPM could turn out to be just as viable a short candidate as well as a long.
- We are erring to the bullish side for now with JPM with very tight parameters.
- Buy on breakout above $105.00
- Stop Loss / Or Short on break below $102.50
HRL – Hormel Foods Corp.
- HRL broke out of a consolidation pattern which is bullish, but remains on a “sell” signal currently (bottom panel)
- Add 1/2 position at current levels and let’s see where it goes from here.
- Stop is currently $41.50
CHDN – Churchill Downs
- After a rally with the rest of the market, it looks like the trade is done for CHDN.
- Look for a break below the 50-dma to see a retest of recent lows.
- Parameters are very tight for this trade.
- Short on break, and close, below the 200-dma
- Stop-loss is at $92
IFF – International Flavors & Fragrences
- IFF recently triggered a sell signal and broken back through its running moving average supports.
- IFF can be shorted on a failed rally back to $135
- Stop-loss is currently $137.50
KO – Coca-Cola Company
- KO remains on a sell signal currently and has broken recent support levels.
- The recent earnings related sell-off has failed to recover suggesting more downside in the near-term.
- Short any rally to $46.5 and add on a break below recent lows.
- Stop-loss is currently $48
HRB – H&R Block, Inc.
- HRB rallied and failed at important resistance
- HRB currently remains on a strong sell signal but has gotten oversold
- We recommended shorting HRB last week and adding on a break below $24
- That break has occurred.
- Stop-loss remains $26
GT – Goodyear Tire & Rubber
- GT remains a favorite shorting position and we have recommended it previously.
- GT remains on a sell-signal and in a steep downtrend. The recent break to new lows keeps that downtrend intact.
- Short on any failed rally to $20-21
- Stop-loss is currently $22
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