The Closing Print live trading and financial blog during market hours.

Warren Buffett was on CNBC again this morning, talking up equities. In particular, he mentioned the five stocks investors should consider in their portfolios.

Paraphrasing “these five companies require little to no capital to operate, produce great products and/or services and make a boatload (my word) of money for share holders.”

Which five did Warren mention? It should be no surprise that AAPL, AMZN, MSFT, GOOGL and FB were on his list.

We have all five of Warren’s mentions on our radar and the IBD50 for good measure.

The stocks below have several things in common, aside from being gleaned from the IBD50. First, these four have reported earnings and have recently pulled back to support. SOTEMA (the slope of the EMA) is bullish and rising. RSI is rising as the stock builds a pattern.

CC pulled back to a breakout zone. Its ATR is 1.47, so we are looking for increasingly bullish prospects as this measure rises, along with price, RSI and SOTEMA.

CGNX is in a hot industry group. Ranked #3 in this group, along with #1 IBD50 candidate COHR. The latter broke out on Friday. We anticipate this flag will resolve this week.

EDU was a previous watch list candidate. The stock completed this first part of our wish list, a pullback to the 9/20ema, with buyers showing up. The stock bounced on Friday. Look for a bullish follow through day, as SOTEMA continues to rise.

MRCY is tracing out a horizontal rectangle pattern, therefore SOTEMA is flat. That will change if this candidate breaks out. RSI suggests this will happen sooner rather than later.

ATHM is saved for last, as the company is scheduled to report earnings. This candidate was on last weeks watch list. Upside resistance shouldn’t be an issue, if all goes well prior to earnings. The lower Bollinger bands are starting to turn inward. If the upper band continues higher, we anticipate a slower ascent, as price approaches this upper boundary.

DY is scheduled to report on May 22. Earnings Whispers, IBD and Yahoo Finance all give different dates for earnings. That’s a problem, so we left this candidate for scalps only. Use the TD setup (Traders Tip #11) for entry and exit/stops.

Stops are below Friday’s low in most cases.

Finally, Warren mentioned on CNBC this morning that “bonds are a terrible idea right now. I’ve been saying that for months.” Well, he also went on to say this is a mathematical fact. You can see this in the Bond Stock (UST vs SPX) ratio very clearly, so even if you don’t believe Warren, the chart speaks for itself.

Happy Trading – Vinny

PS the watch list for the week is below.


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