Embrace Boring Trades

 | Jul 09, 2014 | 12:48 PM EDT  | Comments
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Stock quotes in this article:

csco

,

wmt

Don't like this volatility in the momentum names? Was the drop at the end of the first quarter a little too much to handle? Are you afraid it is going to happen again?

Go boring then. Just find a few Dow Industrial names that you feel will still be around five years from now, which will at least give you a decent dividend while offering some upside. Cisco (CSCO) and Wal-Mart (WMT) top the list from the chart side for me at the moment.

Cisco is a long-term holding for me and I'm happy to collect a 3% dividend as things play out. In the short run, though, there is a cup-and-handle pattern playing out. Today's move shows a push through the handle to the upside. But this has hallmark traits because it is the continuation of an uptrend. The depth of the cup is only a portion of the move and the time frame of the cup is only a few weeks against a multi-month move higher.

Cisco (CSCO) -- Daily
Source: StockCharts.com

I have a target of $26.20, but I do think CSCO could reach $26.50. I am adding to my long-term shares with some swing trading shares now. A close below $24.50 would take me out of the long swing shares.

Wal-Mart isn't quite as strong right now. The pattern almost looks like some evil eyes, but I see it as an evil fighting now for good. Maybe Darth Vader at the end of Return of the Jedi kind of evil eyes. In reality, this is more of a "W" pattern targeting at least $78.50, where resistance awaits. Normally, I prefer to see the right side of the "W" with a higher price than the left side, but the positive moves in the RSI, MFI and CCI tell me momentum and cash are coming into this name.

Wal-Mart (WMT) -- Daily
Source: StockCharts.com

Given the overall market, I see WMT as a more conservative play and one some traders and investors will move to if things get bumpy. A 2.5% dividend isn't half bad either, so I like taking on WMT as a slightly oversized, long-term play, with the idea of selling down to a normal sized long-term position at $78.50 -- or if $74.50 is lost on the downside.

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