Some technical analysts want nothing to do with the fundamentals. Some fundamental analysts would never be caught dead looking at a chart even if there were no clients around. Because no investment approach is 100% perfect, I cannot understand why an open-minded investor would not want to use all the tools at their disposal.
TheStreet recently released a list of 19 companies that could weather a recession. While I majored in economics, minored in finance and passed the Series 86 exam, I have been away from the craft too long to venture in that direction. Instead, I have culled out the best-looking charts from this list of 19. Let's see how these two disciplines can work together. The first name on our short list of four stocks is Chubb (CB).
This short-term chart of CB shows improvement since July when the On-Balance-Volume turned up, indicating that buyers turned more aggressive. We can see a June-to-September double bottom, and in October prices rallied above the 50-day and 200-day moving averages. In February, the Moving Average Convergence Divergence (MACD) oscillator began improving again.
(Read more about Chubb here.)
In this longer-term chart of CB, above, we can see at the top that CB is above the 40-week moving average. The OBV line is OK on this time frame. The MACD oscillator is above the zero line and could return to the topside again.
Church & Dwight (CHD) had a temporary break down under the 2015 lows in January, but quickly recovered its composure to rally above the December highs. Prices are back above the 50-day and 200-day moving averages. The On-Balance-Volume (OBV) line turned up at the beginning of 2016 and the MACD oscillator is rising above the zero line.
(Read Kamich's analysis of Church & Dwight from last year.)
This longer-term view of CHD, above, is positive with prices above the 40-week moving average. The OBV line made a sharp uptick on this time frame while the MACD oscillator appears to be turning up again after a long decline to the zero line.
I don't know if it is the all-day breakfast menu or what, but October marked a turning point for McDonald's (MCD), chart above. MCD has rallied above its 50-day and 200-day averages and the slopes of those two key averages are positive. The OBV line has been rising since October, the MACD oscillator is above the zero line and a new "go long" signal could come soon.
(Read Brian Sozzi's take on McDonald's.)
This longer-term chart of MCD shows off an impressive upside breakout over $104. The slope of the 40-week moving average turned positive in September. The OBV line turns up to confirm the price action and the MACD oscillator is in a bullish configuration.
This short-term chart of PG&E (PCG) was neutral looking for months and then PCG exploded on the upside in January. The OBV turned up and prices are above the 50-day and 200-day averages. The MACD oscillator has also followed the trend up.
This longer-term chart of PCG is also positive with prices above the 40-week moving average. The OBV line has been rising for more than two years, indicating some serious accumulation. The MACD oscillator is turning up, already above the zero line. All good.
We did not cover the other 15 issues because the charts do not yet match up with the fundamental story. That could change as we "keep our eyes open" in the weeks ahead.
