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Long-Short Idea List: 10-10-19

Written by Lance Roberts | Oct 10, 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

AMZN – Amazon.com

  • Last week, we noted that “if the market is going to move higher into year-end, then AMZN should lead the way particularly as we head into holiday shopping season.”
  • The trade setup didn’t change much this past week, and with AMZN’s sell signal pretty deeply oversold there is a decent entry point.
  • Buy at current levels.
  • Stop is adjusted to $1700 hard stop.

ABBV – AbbiVie Inc.

  • ABBV recently bounced off of critical support and has triggered a buy signal.
  • We are looking to add a position to both the Equity and Long-Short portfolios as we like the almost 6% yield in this environment.
  • With the buy signal in place, we are looking for a pullback to $70 that holds to add 1/2 of our position. We will add the second 1/2 position on a break above resistance.
  • Stop after initial entry is $64

CAT – Caterpillar, Inc.

  • I am not crazy about this trade but CAT has been consistently holding support and is deeply oversold at this juncture.
  • Buy at current levels with a very tight stop at $115
  • Take profits at $130.

CRM – Salesforce.com

  • CRM has gotten pretty oversold and the sell-signal is very deep. Importantly, CRM has held a rising trendline support which is bullish.
  • CRM has a tendency to beat earnings and do well, so there is a decent trade setup here.
  • Buy CRM at current levels.
  • Stop loss is set at $142.50

DE – Deere & Co.

  • Both DE and CAT should do well if there is some sort of trade deal.
  • However, DE has been in a long-term consolidation and is close to breaking out to the upside.
  • Buy a position in DE only IF it breaks above current resistance at $170.
  • Stop loss is set at $150.

SHORT CANDIDATES

AVY – Avery Dennison Corp.

  • Last week, we suggested AVY for a long-trade on a breakout above $117.50. That didn’t happen and the “sell signal” has now been triggered.
  • We had originally suggested a short of AVY on a break below the previous stop of $112.50
  • That level has been triggered.
  • Target for trade is initially $100
  • Stop-loss is $115

AMD – Advanced Micro Devices

  • We recently suggested a short-position on AMD if it broke below its consolidation pattern and triggered a sell signal. Both have occurred.
  • Sell short at current levels.
  • Target for trade is $22
  • Stop-loss is $30

FB – Facebook, Inc.

  • Last week, we discussed shorting FB which had been consolidating in a tightening pattern over the last couple of months.
  • With a “sell signal” now triggered at a fairly high level, downside risk remains decent.
  • Sell short FB at current levels.
  • Target for trade is $160
  • Stop-loss is set to $185

BUD – Anheuser-Busch InBev

  • BUD had a very good run this year but that now appears to be over.
  • With the break of the bullish uptrend line, the risk is currently to the downside.
  • Short BUD on any failed rally to $95
  • Stop loss is $97.50 after entry.
  • Target for trade is $80

STZ – Constellation Brands, Inc.

  • STZ has been in a choppy uptrend from the December 24th lows. We actually like the company and will probably add it back to the portfolio at lower levels.
  • However, for now, it has broken important support and looks to go lower.
  • Sell Short at current levels.
  • Target for trade is $170
  • Stop-loss after shorting the position is set at $195

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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

2019/10/10
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