The watch list for the week of February 13, carries several stocks from the IBD50 list and a few candidates from the XII ACRA Institutional Index. Each stock exhibits criteria we look for in a valid setup. Price above the 9/20ema, with RSI, MACD and STO rising. Additionally, we look for stocks in sectors that appear to be in favor, wherein the sector also exhibits these criteria. If the major indices are moving higher, you have a trifecta of sorts, assisting in your new position(s).
Defense spending should capture the attention of investors over the coming weeks, as more stocks show signs of institutional buying. Volume is the key. If you see accumulation, you know institutions have your back.
Boeing (BA) rallied after the election, then briefly dipped on comments about pricing. Since then, price action has found support along the 166.00 (+/-) zone. VBP support is just below Friday closing prices. BA is above its 9/20ema, with RSI rising, volume present and MACD crossing in favor of the bulls. Stop under Friday lows.
General Dynamics is another stock in the defense industry group that will benefit from heightened defense spending. Also note the FINVIZ link to additional stocks in this industry group that have similar characteristics. If you’d prefer to trade a less expensive alternative, look therein for candidates.
The Biotech sector recently broke above a weekly trend line connecting pivot highs. Stocks in the IBB, XBI sectors appear to have a tailwind. Note BIIB just broke above VBP resistance on Friday, with RSI suggesting higher prices. Volume is noticeably bullish. Use the 5/15 minute charts for entry, as described in a recent post. We may have an opportunity to enter on any pullback (profit taking) into Friday’s price action. Stop under Friday’s low.
Home improvement retailers are bullish. Home Depot and Lowes show signs of continuation of the present bullish move. LOW will trigger a SAR buy signal if it pushed through the 200ma this week. Major price support is just below at 72.00. Earnings are scheduled for 3/01/17, so this is a short term swing. Stop under Friday’s low.
AMZN looks good for continuation. Price isa above the 9/20ema, while RSI and STO trend higher. Momentum is shifting back to the bulls camp, as MACD turns higher. Watch histogram for shorter bars and utilize the 5/15 minute for entries/stops.
EXP is trading post earnings. The recent move higher in the latter half of January suggests we could see a similar bounce in the next couple of weeks. RSI and STO are rising. Also keep an eye on Copper. This barometer of construction spending broke out to fresh 52 week highs on Friday. The materials sector (XLB) is bullish.
MOMO – we are looking to scalp this candidate, with earnings one month away. The 5 minute chart is printing higher lows, as part of a ascending triangle. Look for a break to higher prices in the short term. If we get through 24.95, VBP resistance dissipates. Watch for RSI to climb and volume to increase.
Toro may present a PBBO, Pullback to Break Out opportunity. If price action retraces to the breakout zone, look for a bullish candle to form. VBP support is huge along the highs of this nine (9) week rectangle base.
We will add stocks to the watch list this week, if futures and the indices continue their trek higher.
Happy Trading – CV
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