Archive for the ‘Chart of the Day’ Category

Betting on Bristol-Myers Squibb


Here’s a quick take on BMY.  We believe the stock has returned to a very low risk entry zone.  Following last month’s earnings report BMY took an ugly hit after opening the Oct. 26 session with a damaging downside gap.  Further loses were well contained by a solid support zone that includes the January and August highs as well as powerful breakout gap left behind back on September 7th.  BMY rebounded quickly but was unable to maintain upside momentum.  Last week shares dipped again and are testing the $61.00 to $60.00 this week as well.  We believe the stock is a low risk buy near current levels.  On the downside a close back below $59.00 would be a clear warning sign that a deeper pullback is ahead.  Until then we remain positive on the current set up.

At time of publication we are long BMY in some managed accounts.


Netflix Update


Netflix is beginning the week with a nice bounce.  The stock has been consolidating above a major support zone near the $191.00-$189.00 area for the last four weeks.  NFLX may be on the verge of a fresh rally leg after regaining its footing.  We’ve been positive on shares since early August and are long the stock in some managed accounts.   A close back below $188.00 would indicate a deeper pullback is ahead.  

Costco Set Up Well For More Upside


Costco is putting some distance on its 200 day moving average as the week comes to a close.  Today shares are up 1% and will close at the best levels since the massive June 16 collapse.  The stock’s current post earnings rebound has been very impressive.  Over the last ten sessions COST has closed in the red once.  During this streak the stock has blown through multiple layers of resistance, most significant was the October 6th breakdown gap left behind after the last earnings release.  This powerful move has set the stock up well for a continued run.  We regard the $168.00 to $165.00 area as a very solid support zone.  A dip back down to this area will provide a low risk entry opportunity.   A close back below $163.00 would indicate more consolidation is ahead.  A logical upside target is the massive breakdown gap left behind after the Amazon/Whole Foods news.  COST fell over 7% on June 16 after opening with a huge downside gap.  We believe Costco is on its way to $178.40(June 15 low). 

At time of publication we did not have a position in COST.

A Plan For 3M


Back on Oct. 24th shares of 3M exploded to the upside following a very impressive quarterly earnings report.   MMM finished the session with a 5.9% gain, its best performance in years.  Two days later the stock left behind an ugly key downside reversal indicating the big rally that carried it over 32% higher this year had reached exhaustion.  3M has been tracing out a healthy pullback since, one which may have further to go.  We expect MMM to fill the huge post earnings breakout gap as this plays out.  A dip down to the $223.00 to $222.00 area will offer a low risk entry opportunity.  

At time of publication we are long MMM in some managed accounts.


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High Yield Headed Lower


High yield corporate bonds, as represented by the HYG and JNK etf’s, have had a horrible November.  The HYG(iShares IBoxx High Yield Corporate Bond Index)began this month with an ugly downside gap.  As it did at key bottoms in March and August the HYG held its 200 day moving average during the first week of the month.  This week the 200 day has given way as downside volume surged.  Today the HYG is continuing the breakdown and is trading below the August low.  The only monthly low the index has not taken out at this point is the March/2017 lows.  With overhead pressure now very intense, from both the 200 day and 40 week moving averages, more downside is ahead.  We expect the 2017 lows to be tested before year end.  This level($86.00)is a major support zone. 


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What bubble?  These charts offer quite a contrast between stock ownership just prior to the major stock market top in 2007:


And the current environment:



Emerson Electric Extends Sell Off


Emerson Electric suffered serious damage as October came to a close.  On 10/31 the stock fell over 4% on extremely heavy trade, quite a reversal from the new high print just two days prior.  EMR managed to stabilize ahead of yesterday’s pre open earnings report but shares have been under pressure since.  This new down leg will likely drive the stock lower in the near term.  For patient investors a dip down to the $61.50 area, which includes the March, April, June and August highs, will create a very low risk entry opportunity.  Just below this zone is the 200 day moving average($60.65). 

At time of publication we do not have a position in EMR.

Banks Are Heavy


The recent bond market strength is beginning to take a toll on the financial sector.  The banks in particular are looking quite heavy.  We are expecting more downside as this sector continues to pullback from the recent highs.  JP Morgan is one we’re keeping a close eye on.  The stock broke below its ten week bull channel yesterday and is off again today.  A drift down to the summer highs now appears likely.  This key support zone runs from $96.00 to $94.00 and includes the July/August highs as well as the 50 day moving average.  If shares can regain their footing here a very low risk entry opportunity for this high quality bank will develop.

At time of publication we are long JPM in some managed accounts.

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