If you believe that the recent strong dollar may mask some international opportunities, then you may be looking for a few names that are going to benefit from the recent resurgence in the euro, as well as any opportunity China will return to even a hint of recent economic glory.
One name that comes to mind is PPG Industries (PPG). Jim Cramer recently had some solid insight on the company and the opportunity there, but it goes beyond just the fundamental potential. There is potential is the longer-term charts and some history to support it.
If Jim is correct, then this is a story several months down the road and not today or tomorrow, so daily charts really aren't of much use with that thesis.
Instead, I want to focus on the weekly and even give the monthly a glance. With my focus on the weekly, I reviewed some technical triggers for this stock going back not just 5 or 10 years, but all the way back to the 1970s
Hey, why not?
I mean, if we have the data, then why not take a look to try to encompass just about every economic cycle you can imagine or remember.
The pattern I'm looking at here encompasses price action, as well as three measurements on the parabolic stop and reverse indicator. These measurements are short term, medium term and very long term in approach. The idea here is to buy the channel action when the medium-term psar triggers a buy one week after the short-term psar triggers a buy. I then use the long-term psar as the sell trigger. For instance on this chart, the blue arrows indicate the buy point where the medium-term psar (black line) crosses bullish exactly one week after the short-term psar (green line). The sell point, when the stock trends higher, is when the long-term psar (red line) crosses from bullish to bearish. Those points are marked by the black arrows.
I would also use two stop approaches here. First, I draw a support line that connects price with the bottom of all three term psar. If price falls below here, there's a real good chance it is going to continue lower. I would also consider a hard stop no more than 14% below the current price although most of the time, the support line will be less than 14% as shown on the chart.
It doesn't hurt here to see a bullish crossover recently on the slow stochastics, along with an RSI, which managed to bounce of the midline twice in the past two months. I would like to see the vortex indicator complete a bullish crossover this week as well with price move above $235, along with the long term psar (red line) flip bullish. The success rate of the aforementioned pattern is right around 75% with an average net return of just under 10%. It is a longer-term trade with the average winning trade lasting almost 37 weeks, although we've seen the last two come in a bit shorter in time frame than that. The average losing trade last only 11 weeks, so for a long-term thesis, a trader is stopped out rather quickly when wrong.
PPG has spent the first half of 2015 consolidating a solid fourth-quarter of 2014. Looking at the monthly chart, this isn't unusual. Since 2012, PPG has been moving from lower left to upper right on the chart, but we see plenty of times where the stock consolidated for about four months (blue dotted lines). This appears to be another one of those times. The negative here is the consolidation periods have been coming closer and closer together, so it is something certainly worth noting, but a move over $240 should set us up for a push to at least $255. I would use $265 as my target. Anything under $210 and I believe PPG will be in for a sharper pullback into the $180-$190 area.
This all ties in well with the weekly chart. One area I would focus on is the Mass Index. Retracements to this $26 level during the move higher have been good buying opportunities. Those pullbacks have mapped with the pullbacks in the price of the stock. If we fall below $26 that could very well signal the end of the trend, which has clearly been higher since 2012.
I have to agree with Jim on this one. PPG looks like an opportunity here with a 9-12 month target of $260-$265 per share. Investors would collect a small yield during that time, but I would use that as a deciding factor. There are enough other positives in this names and this chart to give it a closer look from the investment side.