Sotheby's: Get Long Before the Gavel Comes Down

 | Mar 17, 2017 | 3:18 PM EDT
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bid

Sotheby's  (BID) was upgraded today by the timely Quantitative Rating service from TheStreet. Sometimes I get asked about how I decide on what stocks to look at. Where do I find ideas? One of my sources of ideas comes from a daily email of quantitative upgrades and downgrades.

Honestly, I can only afford a catalog from Sotheby's. You will never find me being an anonymous bidder on the phone. But you can find me checking out the charts of BID. Grab your auction paddle and join me in looking at the latest charts and indicators.

In this daily chart of BID, above, I can see two important breakaway gaps. One in August and a second one more recently at the end of February. Notice the heavy volume in August? and again in February? Buyers of BID have paid up to get long. The two moving averages we favor are in uptrends -- the 50-day and the 200-day moving averages. The On-Balance-Volume (OBV) line has moved higher the past 12 months and supports the rally. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line -- bullish.

In this weekly chart of BID, above, we can see that prices broke out of above the highs of 2015. There is some resistance above the market in the $50-$55 area but it is relatively old and may not be significant. BID is above the rising 40-week moving average and the OBV line on this timeframe has been bullish since 2012. The MACD oscillator has been bullish since mid-2016 and just turned up for a fresh buy signal.

In this Point and Figure chart of BID, above, we can see that a major breakout would occur with a trade at $51.20. The potential upside price target would be around $69.

Bottom line: Before the gavel comes down, consider going long BID at current levels and adding on strength. I would risk a close below $44.

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