This column is part of chartist Bruce Kamich's series on his Top 5 Stocks in the S&P 500.
3. Franklin Resources (BEN)
In this daily chart of BEN, above, we can see that after a late September low, the trend has turned sideways from down. Prices made new lows in January and February, but that dip was followed by another rally. BEN is now correcting the rally from February to April.
The On-Balance-Volume (OBV) line is neutral, but we will be watching for signs of strength. The price pattern we have been observing this whole time could be an inverse head and shoulders bottom. September could be the left shoulder and the head could be the January to February low. The right shoulder (or the first right shoulder, if we make more than one) could be forming now.
BEN has crossed above and below the 50-day moving average and that suggests that more base building is needed.
In this weekly chart of BEN, above, we can see that prices have rallied above the 40-week moving average line, and then have fallen back below it.
Note that the volume of trading has been heavier since September. Heavier volume at a low, with prices not going lower, suggests that old sellers and new buyers are exchanging positions. The On-Balance-Volume line is neutral. The Moving Average Convergence Divergence (MACD) oscillator is still below the zero line and now looks like it could cross again.
Strategy: The overall stock market is weak today, so I would use available weakness in BEN to acquire some shares. The risk point is clear -- a close below $30 tells me I was wrong, or at best early. You can round out your long position when BEN closes above $41.
Bruce Kamich's Top 5 Stocks in the S&P 500: