Sundays are my favorite day to get a broad view on markets and portfolios, as well as a time to examine some longer timeframes on securities.
Today, I'm taking a look at the five strongest weekly charts from Jim Cramer's charitable trust in the Action Alerts PLUS portfolio. (Spoiler alert. Twitter (TWTR) did not make the list. In fact, it came in dead last. I'm sure that's not a shocker to many folks.)
I'm just going to hit these in alphabetical order.
Even if this weren't alphabetical order, MasterCard (MA) would likely top my list. Granted, I've been bullish this chart since the first quarter of this year without a lot to show for it, but the setup is still valid and still bullish. The $91 area becomes a key point to watch here as it is the support level of the bull flag and the higher lows trend. A close under $90 on a weekly basis will negate the current bullish stance and move this chart into a possible head-and-shoulders pattern or a neutral trading channel.
On the flip side, a close over $94 will trigger a breakout to the upside and see MA on course to $100. We still have a strong RSI as well as a bullish Vortex Indicator. The fluid channel that MA trades within is best demonstrated with simple moving average envelopes. With respect to MA, it seems fairly well confined to trading within plus or minus 5% of the eight-week simple moving average. It has shown a tendency to trade above this envelope for several weeks at a time, but then it tends to see a sharp pullback. On the flip side, it has not remained outside the lower levels of this envelope for more than a week over the past two years.
Next up is the first of the two financials on the list: Morgan Stanley (MS). Morgan Stanley has been a tear since the beginning of April. The stock has risen to almost $40 from $35 over the last 10 weeks. The Vortex Indicator is very strong, with the RSI reaching overbought territory for the first time this year. While the chart is bullish, I'm a bit hesitant to buy. The positive is we are now above the highs of December, so MS may be ready for another push higher. The challenge here is price is at the top of a very steep bullish channel. Furthermore, we are approaching the top of the eight-week simple moving average envelope. The approach is fine, but the stock has a recent history of rejecting this level, which limits our upside to around $41 currently.
With all that being said, the chart is still bullish here. The likelihood of a test of $41 appears high. I would consider that an area to take profits. Keep an eye on the RSI as well, as a drop back under $70 could portend a pullback into the $36-$37 area, although I think that would be a buyable pullback.
I'm not sure any stock in the Action Alert PLUS portfolio better represents Beast Mode over the last six-plus months than Starbucks (SBUX). Shares trade under $36 back in October of 2014 and now find themselves sitting over $52. This run is approaching 50% and looks as though it will get there. After some consolidation over the past two months, Starbucks bounced right off its support line, which coincides with its eight-week simple moving average. Two weeks ago, shares broke over resistance and last week confirmed that move with a slightly higher close. In the short term, Starbucks looks like it could be ready to march up to the $56-$57 area over the next month.
The only drawback here is the air is a little thin. Shares have been overbought for most of the year based on the RSI and the Vortex Indicator is showing a slight bearish divergence. But I'm not looking to fight momentum. Until we see a weekly close under $50, the bullish thesis is strongly intact.
If I were to put a second name behind MA, it would be WhiteWave Foods (WWAV). It's another name showing up with a recent history of being overbought on the RSI, but one showing any pullbacks in price after the RSI dips back below 65 have been buyable. There is a rising wedge pattern, so we want to be cautious under $46 and out of the name under $44. But a move over $48.50 should get momentum buyers back into the name. Obviously, we are much closer to $48.50 than $44. Unlike some other names, WWAV has shown a tendency is ride the upper simple moving average envelope with its history putting it in a much wider envelope at plus or minus 10%.
Last on the list is Wells Fargo (WFC), the second financial name in the top five. This is also the one I see most at risk. A nice little breakout over $56 has breathed some life into WFC, but the very large rising wedge pattern is setting this one up for a decent size move very soon. Over $58 and we should see a nice pop, but under $56 and we could see $53 in a hurry. The RSI is failing to make new highs even though price is hitting highs. Now, the RSI is still slowly rising here, so there is no way I can label this a strong bearish divergence. But if the RSI does turn lower, you should be at least a little concerned.
The offset here is the Vortex Indicator pushing higher. You could almost say this is trend fighting momentum, or a lack of momentum, here. I'd be more comfortable buying the bounce off $53 than buying the breakout over $58. If we see a push higher here, we likely see a move in MS as well. Still, this is a strong chart and deserves a top-five placement. But it simply comes with a few more worries than the previous four.