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Long-Short Idea List: 06-13-19

Written by Lance Roberts | Jun 13, 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

BMY – Bristol Meyers

  • This is not a great long-term set up but for a short-term trade there is an opportunity.
  • BMY is very oversold and is close to registering a short-term buy signal.
  • Buy BMY at current levels.
  • Target is $52
  • Stop-loss is at recent lows of $45.

CVS – CVS Health Corp.

  • We had an unsuccessful trade in CVS previously. We stated that while we like the fundamentals and the business model, the price was simply not cooperating.
  • CVS is now extremely oversold and has been basing for almost 3-months.
  • Buy 1/2 position at current levels.
  • Buy the second 1/2 position on a buy signal and break above $58
  • Stop-loss is set at $52.

DEO – Diegeo PLC

  • We previously recommended a long-position in DEO back in January.
  • The trade has gotten crazy overbought
  • Take profits and reduce overall weight to 1/2 position and wait for a correction to add back into it.
  • Stop-loss is $155

INTC – Intel Corp.

  • INTC had a very sharp correction following earnings and the company has been basing along important support.
  • The “sell signal” and the stock are very oversold.
  • This is a decent trade setup on INTC with a target of $52-54
  • Buy position at current levels with a very tight stop at $43

JNJ – Johnson & Johnson

  • JNJ took a previous hit due to their settlement over “talc.” However, as we stated then, that settlement was a non-event for the company and the stock has completely reversed the sell-off.
  • The breakout from the consolidation is bullish and sets JNJ up for a further advance. We remain long the position in our equity portfolio.
  • Look to buy, or add to, JNJ on a break above resistance at $142.
  • Stop loss on new positions is $135

SHORT CANDIDATES

AMTD – TD Ameritrade Holding Corp.

  • AMTD is not looking good.
  • With a sell signal being triggered and the downtrend holding firm, it looks like AMTD is going to break to the downside of this consolidation pattern.
  • Look to short AMTD on a break below $50
  • Stop-loss is set at $54
  • Target for trade is $40.

CAT – Caterpillar

  • CAT is a casualty of the trade war with China ultimately.
  • The break below the consolidation pattern combined with the onset of a sell-signal suggests lower prices.
  • The current bounce is likely a decent short set up.
  • Short CAT at current levels.
  • Stop-loss is $132.50
  • Target is $100

CRM – Salesforce.com

  • CRM is just stupidly overvalued and is ultimately going to be one of the great shorts.
  • The current topping process continues combined with a current sell-signal following a bounce.
  • Short on a break of support at $150
  • Stop-loss is $160
  • Downside target is $120

EIX – Edison Intl., Inc.

  • The Utility space has been a clear winner but not so much for EIX
  • EIX is close to triggering a sell signal and remains modestly overbought.
  • Short EIX below $59
  • Target for trade is $52
  • Stop-loss is $63

EMN – Eastman Chemical Co.

  • The trade war has not been kind to basic material companies and EMN is no exception.
  • On a newly issued sell signal following a brief bounce, more downside is currently likely.
  • Short on a break of previous support at $67.50
  • Stop-loss is $75
  • Target for trade is $60
  • The short has now hit our previous targets and is oversold.
  • Close out the short-position and look to re-enter on a failed rally to $14.

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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

2019/06/13
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