Shubhankar Adhikari in a story yesterday covered the fundamentals behind three so-called sin stocks that had stable dividends, but I find that picking good investments should go beyond looking for companies with dependable dividend streams. I want to find companies that also have good looking charts and indicators.
Consider it another filter to try to find the best of the best. Let's look at Altria Group (MO) , Diageo (DEO) , and Las Vegas Sands (LVS) .
In this one-year daily chart of MO, above, we can see that prices have recently broken out to new highs, besting the July peak. MO is above the rising 50-day moving average and the rising 200-day moving average line. A bullish golden cross of these averages can be seen in late December.
The On-Balance-Volume (OBV) line has made a new high, with the price action telling us that volume is confirming the rally and that buyers have been aggressive. The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since early December and just signaled a fresh go long crossover.
This three-year weekly chart of MO, above, is pretty impressive. Prices have doubled since early 2014. MO just made a new high with its continued rally above the rising 40-week moving average line.
The weekly OBV line is positive and the moving average convergence divergence (MACD) oscillator has been bullish since early December. The next upside price objective for MO is the $80 area.
This one-year daily bar chart of DEO, above, is mixed. DEO has made big rallies and big declines. Prices have retraced about half of its October-November decline. DEO is above the now-rising 50-day moving average line, but is below the still-declining 200-day average line.
Prices could fail here or put above the 200-day line and volume is likely to be the determining factor. The OBV line has only inched up a little since early December, after declining from July. Buying interest has picked up a little, but not enough to inspire me. The MACD oscillator is the zero line, but the two moving averages that make up the indicator are narrowing towards a possible crossover.
This three-year weekly chart of DEO, above, could use some buying. Prices are testing the falling 40-week moving average line from below. The weekly OBV line shows some improvement but nothing table-pounding. The weekly MACD oscillator just crossed to a cover shorts buy signal and is a long way from an outright go long message.
In this one-year daily chart of LVS, above, we can see a chart with room to move higher. Prices made a low in late June/early July and rallied to late November. Prices have pulled back and corrected those gains. LVS is between the declining 50-day average and the rising 200-day average line.
As prices declined in December, the OBV line remained very steady and suggests that owners of LVS were not aggressive sellers. In the bottom panel there is a small bullish divergence between the lower lows in price in December and the higher lows from the indicator.
In this three-year weekly chart of LVS, above, we can see a large potential bottom formation the past two years. Prices are above the rising 40-week moving average line. The weekly OBV line turned up in April, signaling aggressive buying, and has turned flat in recent months.
The MACD oscillator is above the zero line, but is currently pointed down. Bottom line: LVS is probably going to trade sideways for a while before we see renewed strength.
