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Long-Short Idea List: 08-29-19

Written by Lance Roberts | Aug 29, 2019

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).

LONG CANDIDATES

CRM – Salesforce.com

  • After a big decline, CRM bounced off support and is holding after reporting favorable earnings.
  • Currently, CRM is on an important “sell signal” and support is close by.
  • Buy 1/2 position on a pullback that holds the uptrend line at $145.
  • Buy the second 1/.2 position on a breakout above resistance at $155.
  • Stop is $140 on the whole position for now.

INCY – Incyte Corp.

  • INCY could will either be a long, or short, depending on what happens next.
  • If INCY breaks above the current consolidation, go long INCY with a stop at $80.
  • In INCY breaks below the current consolidation, go short INCY with a stop at $85.
  • The set up for the trade is pretty clear with limited risk and decent reward.

AVGO – Broadcom, Inc.

  • BRCM is in a pretty broad consolidation process currently with a sell-signal currently intact.
  • Buy 1/2 position on a pullback to $270 that holds.
  • Stop-loss is very tight at $265

BMY – Bristol Meyers Squibb

  • BMY has turned up and performance is improving with a “buy signal” now registered.
  • Buy a position at current levels with an initial target of $55
  • Stop-loss is currently set at $46.

GOOG – Alphabet, Inc.

  • We were recently long GOOG going into earnings and sold our position when they announced.
  • GOOG has been consolidating that earnings spike since then and is holding support.
  • Buy on a breakout of the consolidation rate at $1175-1180
  • Stop following purchase is $1150.

SHORT CANDIDATES

AMD – Advanced Micro Devices

  • AMD after a strong run has now triggered a “sell signal.” It is also breaking its previous uptrend suggesting there could be more downside particularly if the trade war ramps up.
  • 1/2 position can be shorted at current levels and added to on break below $26.
  • Target for trade is $18-20
  • Stop-loss is at $23

AME – Ametek, Inc.

  • AME has registered a sell signal as it is currently sitting on important trend line support.
  • Short on a break below support at $82.50
  • Target is initially set at $70
  • Stop-loss is set at $87.50

AMTD – TD Ameritrade Holding Corp.

  • Earlier this year we recommended shorting AMTD a couple of times.
  • AMTD recently hit our initial target which suggests covering 1/2 of the position.
  • Buy to cover 1/2 of the short position at current levels.
  • Next target for remaining 1/2 position is $38
  • Stop-loss is now set to $45

BUD – Anheuser-Busch InBev

  • BUD has had a big run since the beginning of the year and is grossly overbought. It is now beginning to correct that condition.
  • Look for a break of the trend line support from the January lows, and ultimately a registering of a sell signal to confirm the short-position.
  • Short 1/2 position on a break of trend line support at 92.50
  • Short 1/2 position with confirmation of a “sell signal.”
  • Stop-loss is set at $95 after short is initiated.

GPS – Gap, Inc.

  • In February of this year we recommended shorting GPS. It is now time to close that short-position out.
  • Buy to cover the short position at current levels. Short at current levels and add to short below $24.
  • Stop-loss is currently $26

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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

2019/08/29
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