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Long-Short Idea List: 05-23-19

Written by Lance Roberts | May 23, 2019

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

ALE – Allete Inc.

  • ALE sold off to support recently and turned up and is testing previous highs.
  • Buy at $83.50 with a target of $100
  • Stop level is $77.50

AZN – Astrazeneca

  • AZN sold off and broke support and is on a sell signal. However, we are currently seeing the early stages of a rotation into Healthcare so if AZN can break back above the 200-dma a trading position can be added.
  • Currently AZN is oversold and is turning up.
  • Buy at $39 with a target of $44.
  • Stop-loss is currently $37

EGHT – 8×8, Inc.

  • We previously recommended going long EGHT on a decent “trade” setup with a target of $23.
  • That target was reached, so sell 1/3rd of the position and take profits.
  • Stop-loss on balance of position is $22

GOOG – Alphabet, Inc.

  • We previously recommended taking a position in GOOG on the break above the 200-dma.
  • That rally has now failed and is retesting the 200-dma.
  • For now GOOG remains on a buy signal which suggests a long-position can be entered with a decent risk/reward setup.
  • Buy at current levels.
  • Stop Loss is set tight at $1120

VZ – Verizon Communications

  • VZ is a long position in our equity portfolio currently.
  • With VZ testing a triple top, we are looking to add to the position on a break out above that resistance level.
  • Buy on confirmed breakout (must hold above) $61
  • Stop loss is set at $56

SHORT CANDIDATES

CAT – Caterpillar

  • CAT recently broke below its consolidation pattern and is now triggering a “sell signal.”
  • CAT is getting oversold short-term and is impacted from one-day to the next on “trade war” news.
  • Look for a rally to $130ish to short CAT.
  • Target for trade is $100
  • Stop-loss is set at $135

GPS – Gap, Inc.

  • The retail sector is and will remain under pressure from both the slowing economy and from the resurgence of the trade war.
  • Short on any rally to $24
  • Target for trade is $16
  • Stop loss is $26

TSLA – Tesla, Inc.

  • We recommended shorting TSLA a couple of weeks ago as it broke long-standing support. To wit:
  • “There is a high risk of disappointment in this earnings seasons report particularly as auto sales have declined. TSLA continues to struggle in a downtrend of the 50-dma and the $260 level is extremely critical support. However, if the $260 level is broken, the downside will be fast and furious and unshortable at that point. Short at current levels with a stop @ $290.”
  • The break and furious sell-off did occur and now the brokerages are piling on.
  • Our target was initially set at $190 which has now been reached so close out 1/2 of the position and look to re-short TSLA on any rally back to $250/

ROST – Ross Stores

  • ROST is close to signaling a sell signal and is susceptible to both the trade war and consumer spending contraction.
  • The set up currently for shorting is “not ideal.” Therefore, be a little patient and wait for a break of the 200-dma.
  • Short at $92.
  • Stop is set at $95
  • Target for the trade is $77.50

AMC – AMC Entertainment

  • Movie theaters are impacted by constrained consumer spending. Plus, with the continuing ramp up of online streaming services, the need to go to movie theaters is fading.
  • The recent rally to $17 failed and AMC is now close to triggering a “sell signal.”
  • The shorting setup is not great but there is a reasonable risk reward tradeoff.
  • Short below $13
  • Set stops at $15
  • Initial target for trade is $9

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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

2019/05/23
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