Not every name in Actions Alert PLUS is a plus at the moment. There are a few minuses, at least in terms of their daily charts.
There are three names for which I have particular concern in the short term. This is not a judgment on the longer-term fundamental picture, but some key price points or patterns to pay attention to if you are looking to either protect or add to a position.
Energy names top the list, with Schlumberger (SLB) and EOG Resources (EOG) packing a one-two punch here.
SLB suffered an ugly breakdown on Friday with price falling out of the Bollinger Bands to the low side. In the past, Schlumber's price predominantly continues a volatility expansion until it reaches the 13-day SMA Envelopes at 7.5%. This puts the short-term target at $83, with the potential to be a bit lower due to the constant movement of the envelopes. This one needs to get over $90, otherwise the bears can drill this even lower.
EOG isn't quite as bad as SLB here, but those looking for a turn are looking for a sign that has yet to appear. This one needs a close over $91 to shake off the bearish rust, while a close under $88 targets a downside of at least $84. So, what to look for? This is an interesting one combining a pattern of the Bollinger Bands with the SMA Envelopes (13, 5%). The big reversals have occurred when a gap has formed between the Bollinger Bands and the SMA Envelopes. Specifically, what I want to see if the Bollinger Band trade inside the SMA Envelope. If the stock is trending lower then I want to see the lower Bollinger Band greater than the lower SMA Envelope. When the stock is trending higher, I want to see the upper Bollinger Band trading below the upper SMA Envelope.
But wait, don't we have that now? We do, but we don't have the final piece. The SMA Envelope needs to be turning. I've circled in black four recent times this pattern appeared. Preferably, we want to see a very noticeable turn. These have been key to reversals and we just don't have the noticeable turn higher in the lower SMA envelope. I see no reason to add this one until we get over $91. I would look to hedge this one on a close under $88 and wait to remove the hedge until the signs of a reversal triggered.
Last up is Eaton (ETN). Again, we find a stock pushing open its lower Bollinger Band. While that is a yellow flag, it is especially troublesome when you combine it with the current megaphone price pattern. This is a very bearish pattern, although it isn't pure here as we should be seeing higher highs as well as lower lows. So, bulls can throw this into the wedge column if they wish, but it won't help the case much at this $67-$68 downside target. The oversold Commodity Channel Index (CCI) in this type of oversold area has not seen impressive bounces. That's a bit surprising, but worth noting for those looking at a dead-cat bounce. Eaton needs to recapture $72 to remove the red flags and $72.85 to negate bearish sentiment. The slight rise in volume as the price is selling down is also troublesome here. There are plenty of better names out there at the moment, even within AAP.
It would hardly be Father's Day if I didn't at least throw in a little something extra, so, without the charts, I'll just toss Halyard (HYH), Walgreens Boot Alliance (WBA) and Google (GOOGL) as my preferred daily charts.
Surprisingly, the late week reversal in Twitter (TWTR) almost helped it crack the top three, but it just fell a little short of Google.